Bankruptcy Lawyer Bryan W. Stone answers the question: “What is Chapter 11 Bankruptcy?”
Sears, Roebuck & Company, commonly known just as Sears, was founded following the Civil War. Since then, the company has grown and expanded, becoming a popular place for people to shop all across America. Sears has sold a wide variety of items through stores and catalogs, such as clothes, toys, appliances, and even tombstones. As time went on, more and more competition popped up, taking away some of Sears’ clientele. Stores like Walmart and Home Depot became difficult to compete with given their low prices. Additionally, online retailers like Amazon significantly cut into Sears’ customer base. With all of this competition and its decline in sales, Sears has filed for Chapter 11 bankruptcy, according to the New York Times.
Chapter 11 bankruptcy is a type of “reorganization” bankruptcy. It allows businesses to reorganize their debt to make it more manageable. Chapter 11 bankruptcy is available to both businesses and individuals, but the majority of filings are for businesses. In this type of bankruptcy, the debtor retains possession of their assets, as a debtor in possession, but is subjected to oversight of the bankruptcy court.
Sears filed bankruptcy in an attempt to make it through the holiday season. The bankruptcy was filed in the Federal Bankruptcy Court in New York. In order for this bankruptcy to be successful to Sears and give them the opportunity to continue on in the future, the creditors will need to agree that the debts should be reorganized, rather than the company be liquidized in a Chapter 7 bankruptcy. Even reorganizing the debt, Sears is going to be closing 142 stores that have been deems to be unprofitable. Closing 142 stores means that thousands of people will be losing their jobs. Managers of the company hope that this reorganization will result in a the company’s fortunes being turned around, instead of all 68,000 individuals employed by the company losing their jobs.
Chapter 11 bankruptcy begins with the voluntary petition of the debtor being filed in the proper location of the United States Bankruptcy Court. The petition includes information like the assets and liabilities of the debtor, current income and expenses, contracts and unexpired leases, and a statement of current financial affairs. Additionally, a plan of reorganization will be submitted to the court. There will be a confirmation hearing to determine whether or not the reorganization plan will be confirmed.
Bankruptcy sometimes carries an unfortunate stigma that can discourage people, or businesses, to not utilize the help it can provide. Bankruptcy can be an excellent tool to get a person or business back on track and set them up for a better financial future. If the Chapter 11 bankruptcy is successful, Sears can hopefully bounce back to the powerhouse it was before. The same goes for individuals. A bankruptcy can be a strategic tool to give an individual a better future. Whatever chapter of bankruptcy you might be considering, the experienced bankruptcy attorneys at Arnold & Smith, PLLC are here to help you. Our attorneys are well versed in Chapter 7, 11, and 13 bankruptcy. We want to help you get on track to a better financial future. Contact us today for a consultation. We want to guide you through the bankruptcy process so that you can begin toward a better financial future. If you are contemplating bankruptcy in the Mecklenburg County, Iredell County or Union County area, please call the skilled lawyers at Arnold & Smith, PLLC at 704-370-2828 or find additional resources here.
By Dough4872 [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], from Wikimedia Commons
See Our Related Video from our YouTube channel:
See Our Related Blog Posts: