Chapter 11 Bankruptcy
Spare Your House from Business Bankruptcy
Do I need to be a resident of Tennessee to file for Bankruptcy in Tennessee?
The short answer to the question of whether you have to be a resident of Tennessee in order to file bankruptcy in Tennessee is: YES, but . . .
You don’t have to be a resident very long however. You’ve got to be a resident of the state in which you file your bankruptcy case for at least 90 days before filing your petition.
However, if you haven’t lived in Tennessee for 90 days, then you can file in the state where you resided (or had your principal place of business) for a majority of the last 180 days before the filing of your bankruptcy case. This is true whether you are considering filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy or a Chapter 11 bankruptcy.
So let’s say you formerly were a resident of Tennessee, moved away during the last 60 days and are now a resident of South Carolina. You’ve live there for only 60 days, and in Tennessee for 120 of the last 180 days. In that case you’d file your Chapter 7 bankruptcy (or any other kind of bankruptcy) in Tennessee.
Is a Chapter 11 on the Menu for Fast-food Pizza Chain Sbarro?
Reuters is reporting that perhaps next week shopping mall food court favorite Sbarro may seek bankruptcy protection as it obtains over $30 Million of financing. The financing would be available for operations while Sbarro restructures its indebtedness.
Lenders sometimes condition loaning operational money upon the filing of a Chapter 11 case and then obtaining court approval of what is know as debtor-in-possession financing. Most of the Chapter 11 cases filed in Knoxville don’t see this type activity. However, in the major business centers with larger and perhaps “mega-cases” debtor-in-possession financing is a common occurrence. By requiring bankruptcy court approval a lenders obtains certainty in its security position on the collateral.
It’s easy to see that sometimes the filing of a Chapter 11 Bankruptcy case may simply be a tool for the survival and growth of your business. Our firm has been involved as attorneys for the debtor a variety of cases including, hotels, restaurants, car washes, doctors, lawyers (but no Indian chiefs). If your business is struggling during these difficult times don’t delay consulting with an experienced bankruptcy attorney. Delay in developing a plan is often a key factor to an unsuccessful case.
Amid Bankruptcy Rumors, Borders Announces Closing of its Tennessee Distribution Center
Many are asking if book seller Borders can avoid a bankruptcy filing given its continued negative financial situation.
Nearly 300 Borders employees in Middle Tennessee were told yesterday that the Lavergne Borders Distribution Center would close in July. Ouch! Last March approximately 120 employees were cut from the payroll.
The parent company, Borders Group, Inc. is located in Ann Arbor, Michigan. The company lost over $74 Million in the third quarter of 2010. The first quarter of the year is often difficult in the book selling business.
Knoxville bankruptcy attorney Dan Scott wonders if a Chapter 11 case may be on the horizon to allow Borders to restructure its short and long term debt. Among the benefits of a Chapter 11 bankruptcy are:
- The business operates in the same manner it did before the case is filed except it will operate without additional credit in most instances Read the rest of this entry »
Being Knockout Gorgeous Didn’t Stop Eva Longoria’s Vegas Nightclub From Filing Chapter 11 Bankruptcy
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 1/3rd 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 Read the rest of this entry »
Sex Abuse Lawsuits Force Milwaukee Archdiocese into Chapter 11 Bankruptcy
On the eve of the deposition of Milwaukee Bishop Richard Sklba the Archdiocese of Milwaukee filed a Chapter 11 Bankruptcy petition. Like many of the other divisions of the Catholic Church who have been defending numerous child sex abuse cases, the church released a statement saying that the filing was necessary to reduce the significant legal fees incurred in defending the cases and to allow the church to operate on a solid financial footing.
In the past many businesses have used a Chapter 11 filing to manage litigation of one sort or another. Immediately upon filing the petitions all matters are put on “hold” by the automatic injunction, referred to as the Automatic Stay. Any further proceedings occur only after the bankruptcy court has entered an order permitting the action to move forward. This gives much leverage to a business owner who is being out spent by its opponent. Read the rest of this entry »
Sometimes a Story isn’t Good Enough. Johnson City Story Telling Center files Chapter 11 Bankruptcy
The International Storytelling Center has seen the effects of the difficult economy and filed for Chapter 11 Chapter 11 bankruptcy protection on December 31st. Chapter 11 Bankruptcy allows a business to restructure its financial affairs and continue business operations.
If you’ve ever been to the Story Telling Festival in Jonesborough you’d wonder how they could possibly be in financial difficulties. The experience is pretty special and there seems to be thousands of people in attendance.
The Johnson City Press reported that the attendance at the festival was down 16% since 2007. Again, they are seeing the effects of a reduction in discretionary spending brought about by the current recession.
In a Chapter 11 bankruptcy the business continues to operate. At some point a repayment plan, called a Plan of Reorganization, is proposed to pay the creditors of the business. Often the payments are stretch out over additional years. Many times creditors without a lien (unsecured creditors) get paid less than 100% of the debt that’s due. Read the rest of this entry »
Sometimes You Can’t Fix Mistakes Made in Bankruptcy Papers
Mistakes Can Be Costly
I received a call last week. It began something like this. “I filed my own bankruptcy and now the Chapter 7 Trustee says he is going to sell my house. Can you help?”
This is not the first time I’ve received this type of a call.
When money is tight, folks are often tempted to file a bankruptcy in Knoxville by using what is known as a “Petition Preparer”. A Petition Preparer will provide the forms for filing a bankruptcy and will often actually complete the forms for you.
Unfortunately, since they are not lawyers they are prohibited from giving “legal advice” of your rights and responsibilities in the bankruptcy case.
Another problem is that they may not accurately disclose to you that there are a number of strategic decisions that must be made in essentially every bankruptcy case. Among these “strategic decisions” are:
1. When should you file?
2. Should you file a Chapter 7 Bankruptcy, a Chapter 13 Bankruptcy or a Chapter 11 Bankruptcy? Read the rest of this entry »
Pre-packaged Bankruptcy Plan for the National Enquirer Approved by Bankruptcy Judge
The economic recession has taken its toll on yet another high flyer, the publisher of the National Enquirer. Because of rising printing costs and its customers reluctance to purchase the scandal focused newspaper the publisher filed a Chapter 11 in November accompanied by what is known as a pre-packaged plan.
A pre-packaged plan usually is filed in a case where the negotiations between creditors and equity security holders (shareholders) has already taken place. The effect of the approval in bankruptcy court of the Plan is to establish with certainty the position of the creditors and owners of the enterprise.
Here, the secured creditors are expected to be repaid 100% of their claims while unsecured creditors will receive approximately 50% by the issuance of stock in the reorganized company. This was a pretty significant case in which the debt was scheduled at just over $1.2 Billion with assets under $700 Million. Read the rest of this entry »
Is a Chapter 11 Bankruptcy only for Businesses?
Of course we know that GM filed a Chapter 11 Bankruptcy. Chrysler filed, as did Texaco, Delta and most airlines. It seems that every time you hear of a Chapter 11 it’s a business that is being discussed. However, a Chapter 11 bankruptcy is often an appropriate strategy for an individual under certain circumstances.
Certainly a Chapter 11 case is more expensive and more complicated that either a Chapter 7 or Chapter 13 bankruptcy. The case is more expensive because its more complicated and provides more flexibility for a debtor in reorganizing finances.
While a Chapter 13 case requires payments to begin within 30 days of filing the case, often payments in a Chapter 11 case don’t begin for 6 to 9 months after the case is filed. Additionally, while the payments in a Chapter 13 case have a significant regularity, often Chapter 11’s include payments that are staggered or sporadic given the necessities of the debtor.
There’s much more flexibility in a Chapter 11. After the 2005 amendments to the bankruptcy code every individual debtor is required to commit 100% of the debtor’s disposable income for 5 years (a Chapter 13 plan can be as short as 36 months).
Sometimes because of the total secure debt that exists, a person may not qualify for a Chapter 13 so a Chapter 11 is the only option. Again, a bankruptcy filing is often necessary to manage difficult financial circumstances. An experienced bankruptcy attorney can help evaluate these options.