Chapter 11 Archives

First Day Orders in Chapter 11 Bankruptcy Cases

When a Chapter 11 business bankruptcy is filed, as a general rule the debtor company cannot pay prebankruptcy debts until a plan or reorganization is approved many months letter. However, in certain circumstances the inability to pay certain prepetition debts can put the company out of business. For example, if a bankruptcy is filed on a Thursday and the next day payroll is to be paid for the prior 2 weeks, the company must be able to pay that or will lose many employees. Or a company might be dependent on the services of a vendor such as a vendor that provides packaging for items sold by debtor. To avoid impacting the debtor the rules provide the opportunity to file a motion to be heard almost immediately on the first day the bankruptcy is filed. The rules such as New Jersey local bankruptcy rule 9018 require immediate notice by telephone and email to creditors to have an opportunity to respond or object. While the creditors have limited time to respond these orders are necessary if a reorganization is to be successful 

USA Gymnastics files for Chapter 11 Bankruptcy

USA Gymnastics filed for Chapter 11 Bankruptcy. https://people.com/sports/usa-gymnastics-files-for-bankruptcy/  The Chapter 11 is to allow USA Gymnastics to reorganize and to deal with claims in the wake of the multple sex abuse allegations. USA Gymnastics released a statement indicating as follows:

Asset Sales in Chapter 11 Bankruptcy

 Chapter 11 Bankruptcy is available to businesses that desire to sell their assets but have debts exceeding the value of the assets. While Chapter 7 can be used for a liquidation of assets there are circumstances where it is important to maximize the amount received and selling as a going concern makes more sense. A Chapter 11 liquidating plan can be used for that purpose. However, sometimes it is necessary to have a more immediate sale and waiting until the confirmation hearing is not an option. In that situation the company can seek to sell its assets through a sale pursuant to section 363 of the Bankruptcy Code. The section is usually used to sell specific assets but more and more it is used to sell all of the company's assets. Generally the seller must demonstrate that business may not survive until confirmation and this is the best opportunity for creditors to be paid. The 363 sale is not for all sales but in some cases it may be the best option.

Philadelphia chapter 11 bankruptcy filed by Zitner Candy Corp.

In Philadelphia Pennsylvania a chapter 11 bankruptcy was filed by Zitner Candy Corp. Zitner Candy, located on 17th street near Temple University in Philadelphia filed for Chapter 11 bankruptcy on April 13, 2018. Court documents reveal the company had significant secured debt at the time of the filing. The chapter 11 bankruptcy is generally used by debtors in an effort to restructure and reorganize its current debt problems

Former Philadelphia Eagle Mike Vick completes chapter 11 bankruptcy

 It appears that not only were the current Eagles on a roll in 2017 making it all the way to the Super Bowl but it was a good year for former Eagles as well. Former Philadelphia Eagle Mike Vick needed to file for chapter 11 bankruptcy after he was involved in a dog fighting scandal that caused him to lose his NFL job and his endorsement income. According to court papers he was required to repay over 17 million to his creditors. After making a comeback in the NFL and playing for the Philadelphia Eagles, New York Jets and Pittsburgh Steelers he was able to complete his required payments for the chapter 11 bankruptcy at the end of 2017 and the case is now closed

Chapter 11 for Toys R Us with Cherry Hill and Deptford NJ Locations

Toys R Us, which has locations in Cherry Hill New Jersey and Deptford NJ filed a Chapter 11 bankruptcy to reorganize its debts. Even though they have not yet obtained a court approved plan, the executives of the company have now asked the bankruptcy court to approve millions of dollars in bonuses for those executives. Not surprisingly, the US Trustee's office opposes the payment of such bonuses and filed an objection. The bankruptcy judge will now consider the documents submitted and the arguments of the lawyers and then render a decision. It is also possible that the attorneys will reach an agreement, for example, agreeing to a lower bonus, and then they would ask the court to approve the compromised amount.

INDIVIDUAL CHAPTER 11 BANKRUPTCY

An individual Chapter 11 bankruptcy is typically filed when an individual is not eligible to file a Chapter 13 bankruptcy because they exceed certain debt limits. You cannot file a Chapter 13 bankruptcy if you have more than $394,725.00 in unsecured debt or more than $1,184,200.00 in secured debt. Individuals trying to save their home may be prevented from filing Chapter 13 because, for example, they had a business that closed and now have significant debt beyond the debt limit. The good news is they can still save their home by filing a Chapter 11. While it is more expensive and there are more obstacles to overcome, such as voting, it is a good alternative when Chapter 13 is not possible.

Cherry Hill New Jersey Sports Authority Closed in Chapter 11

Sports Authority has filed for Chapter 11 bankruptcy. According to NPR.org, http://www.npr.org/sections/thetwo-way/2016/03/02/468869118/sports-authority-files-for-chapter-11-bankruptcy-protection  the sporting goods retailer was carrying a heavy debt load and needed to restructure. In its restructuring, Sports Authority plans to access nearly $600 million in debtor-in-possession financing and close or sell approximately 140 stores and two distribution centers. This includes stores in Cherry Hill, New Jersey, East Brunswick NJ and Piscataway NJ as well as Easton Pennsylvania and Whitehall PA. The company operates more than 460 locations. Chapter 11 is often used as a way for companies to get out of bad leases while retaining the good ones.

Chapter 11 filed by Sun Energy

Despite an industry such as the Solar industry being  strong and growing, companies can still wind up in Chapter 11 bankruptcy.  USA Today, at http://www.usatoday.com/story/money/2016/04/21/sunedison-chapter-11-bankruptcy/83329928/  reports that SunEdison, a renewable energy firm, filed for Chapter 11 bankruptcy reorganization on April 21, 2016. The company recently failed to acquire Vivint Solar and had no additional sources of liquidity to pay off $300 million in debt financing. The filing does not include SunEdison's two subsidiaries, TerraForm Power and TerraForm Global. Apparently the plan now is  to shed debt by selling "non-core" assets. Andrew de Pass, CEO of rival solar installer Conergy said, in regards to SunEdison's bankruptcy, "It has nothing to do with the state of the solar industry in the U.S. or globally. The solar industry is extremely strong." As reported in the USA Today article, according to the U.S. Energy Information Administration, solar power generation in the U.S. was 23.2 million megawatt-hours, up 52% from 2014 and up 186% from 2013. Whether the economy is strong or weak, whether an industry is strong or weak, companies may still need to file bankruptcy to address debts.

Teen and women's clothier Deb files for Chapter 11 bankruptcy

Teen retailers that do not keep up with fashion trends are very likely to have a hard time generating the revenue necessary to stay in business. Many teen clothiers are noticing a steady decline in sales due to new competitors in the market. Many shops in New Jersey, and across the United States, are feeling the impact and are being forced to take action to avoid shutting their doors. These businesses may make the important decision to file for Chapter 11 bankruptcy in an effort to save their companies.

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