Kell C. Mercer, P.C.Small Firm BIG MIND, Business And Commercial Bankruptcy2023-03-21T12:22:21Zhttps://www.mercer-law-pc.com/feed/atom/WordPress/wp-content/uploads/sites/1201328/2020/01/cropped-Fav-min-32x32.jpgOn Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471502020-11-18T12:02:55Z2020-11-18T12:02:51ZChapter 7 business bankruptcy, remember that there are some kinds of debts that you won’t be able to eliminate. Those may include:
Any money that was obtained through fraud
Tax debts, such as payments for sales taxes
Debts owed because of negligence
Many companies are able to pursue a Chapter 7 bankruptcy, though, and doing so gives the owners great relief in being able to walk away from the business without further liability.
Will you be able to stay open after a bankruptcy?
Depending on your situation, you should know that you may end up with little to nothing remaining of your business assets once your debts are paid back. However, in some cases, those who pursue a Chapter 7 bankruptcy are able to stay open if they are able to repay what they owe and have enough financial support remaining following the liquidation.
If you want to stay open, a Chapter7 bankruptcy may not be the right option for you. Other options, like a Chapter 11 bankruptcy, could give you more support in restructuring your debts and helping you work toward more sustainable business practices in the future.
Our website has more information on bankruptcies and how businesses can use them to their advantage as they deal with unwanted debts.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471422020-11-13T17:52:48Z2020-11-13T17:52:44Zfinancial professionals, Chapter 11 entails a re-organization plan whereby creditors are segregated by the type of debt they hold and paid by a priority method approved by the court. The plan is designed with the best interests of the creditors in mind.
Individuals typically file either Chapter 7 or 13 based upon an ability to pay some, if not all, of the debt owed. Chapter 7 is often referred to as liquidation because all non-exempt assets are sold to pay creditors. In comparison, Chapter 13 involves the creation of a repayment plan, which generally repays a portion of the debt over a three- to five-year period.
It may be helpful to work with an experienced bankruptcy lawyer to determine the appropriate type of bankruptcy to file. Credit scores are impacted immediately, and the bankruptcy will remain on credit reports for five to seven years. However, the reason most people file for bankruptcy is because they are in an untenable financial situation, and bankruptcy provides for a new beginning with the ability to pay bills on time.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471392020-11-04T14:32:56Z2020-11-04T14:32:39Z
While this isn’t a comprehensive list, it highlights some of the more common signals that business owners can watch for. Ultimately, taking a realistic look at the profit and loss statement, as well as other financial documents can give you the best information about your company’s health.
If your company is showing any of these signs of financial trouble, you should consider the options you have before you. For some companies, filing for bankruptcy becomes the best choice. Discussing the case with an attorney can help you find out what this would mean for you, your company and your employees. Being sure to act as soon as you realize something is amiss may give you time to consider the options from a practical standpoint.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471312020-10-30T18:10:57Z2020-10-30T18:10:53ZChapter 11 bankruptcy. In the beginning, several creditors made it difficult for J.C. Penney to arrange a deal with the property owners. However, the CEO clarified recently that J.C. Penney attends to go ahead with the deal.
In September, an attorney involved in the case said that J.C. Penney was negotiating an $800 million deal that would allow the company to pay off debts and finalize the bankruptcy proceedings. The next hearing on the case is scheduled for November.
Can filing for bankruptcy help you save your business?
If you're unable to pay off your business debts, you might have to turn to bankruptcy as a last resort. However, filing for bankruptcy doesn't mean that you have to shut down your business. You might be able to save your company and start making a profit again.
An attorney may be able to help you file for Chapter 11 bankruptcy so that you can restructure your debts and make them easier to pay off. Since you won't be selling off your business, you can continue to operate your business while managing a payment plan. Your attorney may help you file a petition for bankruptcy, gather documents and figure out how to repay your debts.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471262020-10-28T16:40:38Z2020-10-28T16:40:27ZSuccessful case studies
While many businesses fail to pay their debts even after filing for Chapter 11 bankruptcy, there are lots of successful stories to encourage business owners to get help by filing for Chapter 11. Here are some of the most well-known recent examples:
Apple and Chrysler took government bailout packages to reorganize their business structures. Eventually, both these companies managed to attract investors who bailed out these companies from debt.
General Motors and Ally Financial are prominent names in the auto industry that took government assistance to get out of the debt. After the approval for the budget restructuring plan, both companies emerged even more profitable and healthier than the pre-bankruptcy period.
Marvel Entertainment and Six Flags successfully reorganized their businesses by changing their corporate structure. During the bankruptcy proceeding, Marvel Entertainment entered the movie-making businesses while continuing the traditional comic book segment.
Many might think that filing for a bankruptcy is detrimental to a business. Contrary to the belief, lots of companies come out stronger. If your business is in a difficult situation, getting help with business and commercial bankruptcies, often, leads to a better future.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471232020-10-26T16:40:49Z2020-10-26T16:39:59ZBeloved regional coffee companies pursuing Chapter 11
In Pittsburgh, Pennsylvania, news sources recently announced that Ed’s Beans Inc. would be filing for Chapter 11 due to financial problems largely caused by the pandemic and the forced closure of many of its coffee shops. Ed’s Beans Inc. is the parent company of a wholesale coffee roasting business known as Kiva Han and of the Crazy Mocha Coffee Co., which has been called “Pittsburgh’s biggest homegrown coffee shop chain.”
In New York City, the Brooklyn Roasting Company also recently announced a Chapter 11 filing. The BRC includes both a wholesale roasting business and seven retail cafes, and it suffered major financial hardship this year due to the forced shutdown of its coffee shops. It could not afford to continue paying rent with such a dramatic reduction in business, and the company was forced to lay off the majority of its café staffers.
Downsizing and refocusing on profitability
The BRC’s bankruptcy filing comes with an announced plan to keep the company afloat during the pandemic. Although its coffee shops are closed indefinitely, the company will focus solely on growing its wholesale roasting business. In time, the company could rebuild its retail operations, but will let those go for now. The company’s business manager noted that although they are facing financial trouble, the BRC still retains financial assets and good-will assets that include a high-end production facility, a great reputation and a dedicated core management team.
Can your business change direction through Chapter 11?
Obviously, these two coffee companies are not based here in the Austin area, but their stories are indicative of what many Austin small business owners are facing. And like these companies, your business may benefit from a Chapter 11 filing if you believe it could regain stability and profitability with some outside help and a plan for debt reorganization.
Chapter 11 bankruptcy focuses on business restructuring, and it is often appropriate for companies that have fallen on hard times due to outside circumstances that don’t reflect their long-term potential for profitability. Although a Chapter 11 plan isn’t quick or easy, it can provide a crucial opportunity to hold on to a business you worked so hard to build.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471202020-10-25T03:47:35Z2020-10-25T03:47:29ZChapter 7
The upside is that you clear most of your debts. You will still need to pay overdue taxes, any money you gained through fraud or money you owe due to negligence, but it wipes out most other debts.
The downside of Chapter 7 is that it usually signifies the end of your business. All the hard work you put in and the reputation you built over the years will go to waste. Your assets will be liquidated to cover your debts. This could include your home.
Chapter 11
This is generally the best option if you want to keep your business going. While creditors may wipe some of your debts, you usually have to repay at least a part of each one. You will need to commit to a repayment schedule decided upon by the creditors and the court. If you owe money to various people, it can be complicated, as they may not agree with each other.
In some ways, Chapter 7 is the easiest option. You can walk away, leaving your problems behind you, and start afresh. However, it is not so good for creditors who may receive nothing, or whatever little your asset sale raises. Thus, it comes with additional restrictions over Chapter 11. First, you must pass a means test to qualify. Second, there is an increased limit on how recently you can have filed before or how soon you can file again.
One final thing to remember is that the success rate for Chapter 11 is pretty low. Some sources put it at less than 15%. Seek legal advice to understand the full implications of bankruptcy for your Austin business and find the right option.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471172020-10-13T15:24:54Z2020-10-13T15:24:50ZThe role of externalities
The reason that you can’t entirely bankruptcy-proof a company is that the strength of said company depends on more than just your own decisions as owner and CEO. A lot of things are completely out of your hands. You have zero control. Even so, they can massively impact your business. These are typically called externalities. Some examples include:
Stock market crashes
Economic recessions
Natural disasters, such as floods, fires, cyclones or droughts
Changes to tax laws or regulations
Mistakes made by other business partners
Changes in the exchange rate
The rise of new competitors
The creation of new technologies
Unexpected defaults by those who owe you
Alterations to procurement policies by corporate customers
Unpredictable changes in typical customer buying decisions
You can’t always control these issues. You may have incredible products and services, but what if people view them as a bit of a luxury? For instance, say you offer lawn services and employ 30 people. You’re doing well, but what would an economic recession mean? Would your lawn customers try to trim their own bills? If so, there are likely things they value above lawn services. If so, even if they absolutely love the job you’ve been doing, they may end their contracts with you and send your company into bankruptcy.
What are your options?
Since you can’t control everything, what you can do is to plan ahead. You must know what options you have and what steps to take. Rest assured, you do have legal options, no matter what your situation looks like.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471142020-10-12T10:29:52Z2020-10-12T10:29:48Zalternatives to filing bankruptcy. Each of these options carries with them various pros and cons.
A receivership is a process by which a creditor, or receiver, takes over the debtor's property under the court's supervision. The entity that takes over the property can use their discretion to decide how they proceed once this happens and up until the court decides how to best dispose of the debtor's property. They may choose to either run the business as their own, cease operations or liquidate the property they receive.
Debtors also have the option of agreeing to a composition with their creditors. The latter will generally agree to accept an amount lower than the original loan to remove a debtor's further liability for the debt. Creditors who wish to collect the full debt may decide against a composition. They may instead attach the debt to any assets the debtor may have.
Assignments for the benefit of creditors involve a debtor transferring the majority of their assets to a credit managers' association or adjustment bureau trustee. That individual would then sell off those assets and distribute any proceeds from the sale to creditors in a predetermined manner. Not all creditors have to agree with this process. If a business' assets don't sell for their full value, then a debtor may owe the remaining debt. Most jurisdictions' laws allow debtors to request releases in such instances or prohibit creditors from claiming an outstanding balance.
It can be hard to think straight when you have creditors calling you or sending you letters all the time about your Austin company's outstanding debts. This endless communication back-and-forth can make deciding between debt-relief options quite tricky. An attorney can help you sort through the different options you have available to you in Texas so that you can move on with your life once again.]]>On Behalf of Kell C. Mercer, P.C.https://www.mercer-law-pc.com/?p=471102020-09-28T15:11:55Z2020-09-28T15:11:49ZSection 11 U.S.C. § 547 of the Bankruptcy Code, a debtor that’s about to seek bankruptcy protection can’t treat their creditors unequally by choosing to pay some and not others. If a debtor pays off their bill to a specific creditor within 90 days of filing for bankruptcy, the trustee has the ability to “claw back” that payment.
There are two main purposes to the rule. First, it makes the bankruptcy process fair for all the creditors. If any money or assets are to be divided, each creditor should get an even distribution. Second, it keeps the most aggressive creditors from trying to essentially bully or guilt the money they’re owed out of a debtor’s hands right before they go under.
You don’t have to immediately cut a check when you get a demand letter threatening a preference action, however. Quite often, there are defenses available. Talk with an experienced attorney here in Austin about your situation.]]>