There are times in business when you know that liquidation (Chapter 7 Bankruptcy) is the only way out. However, there are other situations where a reconstruction (Chapter 11 Bankruptcy) may be an option but in reality the business is better off folding. This is certainly true in small one person businesses where the business centers around that person’s trade or skill.
By closing the business and liquidating, the owner can then sit back, analyze where their business went wrong and how they can go about re-establishing a new business. Because they have a trade or skill, they may even find that employment is a better option in the short term. This will enable them to rebuild their capital and to perhaps start on a better footing.
Tradespeople often make poor business managers. They can be very good at their trade, but when it comes to collecting on outstanding accounts, and balancing income, expenditure, and cash flows, they have no idea. B
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Business, Business Should
Is there any such thing as an emergency bankruptcy? Filing for bankruptcy is a complicated business and even with the help of a bankruptcy attorney, it can take days to collect all the information (and paperwork) required let alone fill out all the forms. Yet there are times when filing for bankruptcy today is your only perceived option.
You can file a petition for an emergency bankruptcy. When filing, you only need to fill out the first three or four pages of a petition, however, the filing fee is close to double the norm and you will need to submit the remaining pages of the petition within seven days.
Why would you need to file an emergency petition for bankruptcy? There are a number of reasons, the main one being the imminent foreclosure on your home or the repossession of your car. Other reasons include pending eviction and wage garnishments that make living impossible. An emergency petition for bankruptcy will bring any action to a stop – it will also cancel out any wage garnishments.
From a business perspective, an emergency Chapter 11 petition may forestall a forced Chapter 7 petition. U
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Bankruptcy, Emergency Bankruptcy
If you’re in financial difficulties, then the time has come to prioritize your debts. You can classify your debts into three areas – those that will result in a loss of an asset, those that are not discharged through bankruptcy (exempt liabilities), and those that can be discharged through bankruptcy. Once you have organized those debts, structure your cash flow to match – that is, pay what’s owing on the first group, then the second group, and finally the last group.
The rationale behind this is simple. If you were to concentrate on unsecured debts, you could be putting your home or car at risk. If you keep yourself up to date on your mortgage and car payments, the worst an unsecured creditor can do is seek a default judgement against you, and that can be reversed.
If the worst case scenario eventuates and you need to file for bankruptcy, the court will take a similar approach. Your secured creditors and those creditors whose balances are exempt from discharge will receive the bulk of any funds you have. Your unse
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Debts
The idea of a bankruptcy trustee is alien to most people, having never become involved in a bankruptcy. Even those who have filed for bankruptcy personally are often unaware of the full rights and responsibilities of a trustee. What is a trustee? Who appoints him? What do they do? Is the trustee a judge? Is there a difference under the various bankruptcy chapters?
A Bankruptcy trustee is an individual in charge of administering an estate in bankruptcy. They are appointed by the United States Trustee and United States Department of Justice or by the creditors in a specific case, usually off of a list that includes bankruptcy attorneys.
In Chapter 7, the bankruptcy trustee gathers the debtor’s non-exempt property of the estate, manages the sales of this property and the proceeds of such sales, and distributes the proceeds. Additionally, the Chapter 7 trustee attends creditor meetings, determine what assets may be exempt, and even cancel certain creditors’ rights if he finds them to be fraudulent. In Chapter
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Bankruptcy Trustee, Trustee
One of the requirements for filing a petition for bankruptcy is the attendance at a pre-bankruptcy counseling session. To prove to the court you have attended this session, the counselor provides the debtor with a special certificate. This is known as the Pre-Bankruptcy Counseling Certificate and it must be submitted to the court with the initial petition for bankruptcy.
While that sounds simple, the process itself is not. To begin with, you cannot attend just any credit counselor. You must attend a session that is run by a not-for-profit counseling organization. That organization must be approved by the bankruptcy court in the district in which you intend to file for bankruptcy. Your local bankruptcy court is the best place to look for a counseling organization that meets those requirements.
If filing a joint petition for bankruptcy, you must both attend counseling and you must each receive a certificate. If you are in the process of marriage separation, you can attend counseling sessions separately.
The counseling session itself must be for a minimum of sixty minutes (between 60 and 90 minutes is the norm) where you will be required to discuss your current financial situation.
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Counseling, Prebankruptcy Counseling
Summary
In a 56 page opinion published June 9, 2011, Judge Walsh ruled that a method of operating in which all of the credits and debits between two companies were netted out allows this same method to be used in calculating a set-off defense in preference litigation. Judge Walsh’s opinion is available here (the “Opinion”).
Background
American Remanufacturers, Inc. (the “Debtor”), was in the business of remanufacturing, or restoring, used automobile parts. The Debtor would purchase broken and non-functioning parts, or “Cores,” from the defendant in this case, AutoZone Inc. (“AutoZone”), remanufacture the Cores, and sell the item back to AutoZone for sale to the final consumer.
When AutoZone purchased items from the Debtors, AutoZone would pay an item cost and an additional Core cost. Opinion at *6. When at item is sold to a consumer, the consumer pays a price that includes the Core cost. The consumer can then return to AutoZone a Core, often the broken part they are replacing, to receive a partial refund from AutoZone. AutoZone will the
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