Being in financial difficulty isn’t about your character and it apparently isn’t about your looks either.  The Associate Press reported today that the Las Vegas nightclub owned by Eva Longoria, one of the “Desperate Housewives” filed for Chapter 11 bankruptcy.  Chapter 11 bankruptcy allows the debtor to reorganize its financial affairs and pay its debts over time.

The bankruptcy papers indicate that the nightclub expects to lose about $76,000 per month.

In addition to being a 1/3^rd owner, Ms. Longoria is also a significant creditor of the company. Although the business asserts that it owns over $2.5 Million in assets, its debts exceed $5.7 Million.

What will happen next is unknown.  Often a Chapter 11 bankruptcy is used to change management and implement or execute a new business plan.  Often there is a short delay in paying secured creditors which allows the debtor to build up cash.  This is a method to capitalize the company to allow it to get past tough financial circumstances.

Usually, as is the case with Ms. Longoria’s nightclub, the business continues to operate in much the same manner as it did before the bankruptcy case was filed.

Chapter 11 cases in Knoxville are often filed for the same reasons.  I frequently hear, “If I just had more time, I could work through this.”  A Chapter 11 is a great resource under the guidance of experienced counsel.