July 24, 2017

Chapter 11 or 13 for Troubled Businesses ?

This month news of an oil and gas producer filing for Chapter 11 bankruptcy protection made news. The reason cited for the financial difficulty is the drop in oil prices, which have have slid some 50 percent since June. My Chapter 11 clients own small to mid-sized businesses, but they have the same problems as bigger companies who need to reorganize under the orderly process of a bankruptcy … [Read more...]

Choosing a Chapter 13 Bankruptcy Specialist

Filing a Chapter 13 bankruptcy case isn’t as straightforward as a Chapter 7 case. I usually find that my Charlotte area clients who need Chapter 13 bankruptcy protection have complex issues to resolve including: Businesses and partnerships that need to be unwound or otherwise dealt with Unpaid tax liabilities with the state and IRS A number of mortgaged properties and other assets they … [Read more...]

Chapter 11 Bankruptcy Primer, Part 2 of 2

While Chapter 11 bankruptcy is not as frequently employed as Chapters 7 and 13 it is appropriate in some circumstances. This post, along with the first part in the series, will answer many frequently-asked questions about Chapter 11. I also recommend downloading my guide to Chapter 11 here. Q: What questions do I ask a prospective Chapter 11 client to determine whether they should “collapse … [Read more...]

Chapter 11 Bankruptcy Primer, Part 1 of 2

Chapter 11 bankruptcy cases by large corporations make the news more frequently than smaller companies using Chapter 11, leaving some business owners and nonprofit organizations like churches wondering whether Chapter 11 is an option for them. Chapter 11 is not as straightforward to explain as Chapter 7 or Chapter 13, so I wrote this white paper on Chapter 11 and designed this FAQ: Q: How … [Read more...]

Closing a Failed Business and Starting Another Like It

I have written this letter at various times to deal with the legal obstacles to closing an unprofitable business and getting a "fresh start" with another one. The primary legal obstacle is called "successor liability" [note]Dear (Business Owner): I understand that you have essentially been self-employed and wish to continue in the same line of work. I also understand that your present … [Read more...]

Receivership: North Carolina Bankruptcy Equivalent

While most people have some familiarity with the concept of bankruptcy under federal law, many people are unaware of the concept of receivership under North Carolina law. What is receivership? A federal bankruptcy judge oversees the bankruptcy case, with the help of the Bankruptcy Administrator. In a receivership, the North Carolina court appoints a receiver who is an officer of the court and … [Read more...]

Chapter 7 Bankruptcy: Businesses & Individuals

The word "bankruptcy" is heard everywhere, from coffee shops to church bazaars and the evening news. It's clear to me that, despite this general knowledge of bankruptcy, few people understand what it means to file for protection under Chapter 7, Chapter 11 or Chapter 13. Chapter 7 is a liquidating bankruptcy.  It is normally utilized to obtain a “fresh start” for an individual debtor, and, far … [Read more...]

Chapter 11 Bankruptcy for a Healthy Turnaround

Yesterday General Motors  announced second-quarter profits that exceeded expectations and came as G.M. was putting the finishing touches on an initial public stock offering. This is good news from a company forced into Chapter 11 bankruptcy a little more than a year ago. According to Dow Jones Daily Bankruptcy Review, "After recent years of financial distress and bankruptcy filings, U.S.-based … [Read more...]

Personal Loan Guarantees for Business

After forty years of helping small business owners with their financial difficulties, I wish more of them understood how the personal guarantee can send them into bankruptcy. It's difficult for self-employed people and small business owners to get capital, and the lack of capital is a big part of the reason business owners file for bankruptcy when their businesses stumble or fall -- a vicious … [Read more...]

Failure Can Teach Success

The Kauffman Foundation just published a study of 549 company founders of successful businesses in high-growth industries. I zeroed in on this finding: "40 percent cited lessons learned from failures as extremely important – the second-highest “extremely important” rating." Lessons from forty years in bankruptcy court After forty years of practicing law I can validate Kauffman's findings. I … [Read more...]