Bankruptcy Lawyer Bryan W. Stone answers the question: “What is Chapter 11 Bankruptcy?”
Heritage Home Group, a High Point furniture manufacturer, has filed for Chapter 11 Bankruptcy, according to Business North Carolina. Heritage Home Group filed a Chapter 11 petition with the hope of restructuring the company. They also want to sell their brands, including Thomasville, Broyhill, Hickory Chair, and Maitland-Smith. The decision to file bankruptcy is the result of $280 million in debt that the company is facing. Sales were down 27% from the previous year’s sales. The company does anticipate any changes in their operation while the restructuring takes place.
Heritage Home Group was formed after a different furniture brand filed for Chapter 11 bankruptcy back in 2013. The petition lists both assets and liabilities that the company had between the amounts of $100 to $500 million. There are buyers already in line for some of the brands under Heritage Home Group, Hickory Chair, Labarge, Maitland-Smith, and Pearson. The remaining brands will be sold at an auction.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is an option that a business, like a corporation or partnership, uses to reorganizing the company. The hope is to restructure the company to give way to a more stable financial future. The company will pay off its debts over time by making payments to creditors. While it is more often that a business files Chapter 11 bankruptcy, an individual is also permitted to file Chapter 11.
The process of Chapter 11 bankruptcy is as follows:
- The filing of a petition in the area that a debtor resides. A petition can be either voluntary by the debtor, or involuntary from creditors of the debtor (but only if they meet certain requirements).
- The petition filed must conform with the official forms, including a schedule of assets/liabilities, current income and expenses, contracts and leases, and a statement of financial affairs.
- The debtor, or debtors, must pay a filing fee.
- A United States Bankruptcy trustee is appointed to oversee the case. The trustee conducts a meeting that involves the debtor, the attorney, and any creditors that want to witness it or make a statement. At this meeting, the trustee will talk to the debtor about the case and investigate any issues.
- A written plan of reorganization must be filed that details the debtors plans to pay their creditors. The trustee monitors the payments and ensures that all parties are completing their duties.
The above five steps are not every single occurrence in a bankruptcy case, but the general framework of a Chapter 11 bankruptcy petition. If you are considering filing Chapter 11 bankruptcy, or another chapter of bankruptcy, you need an experienced attorney. The bankruptcy attorneys at Arnold & Smith, PLLC are here to help you. Bankruptcy can get a negative reputation, but we want to show you how it can be a strategic financial decision. Do not let the reputation or stigma surrounding bankruptcy deter you from making the best decision for yourself or your business. 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.
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