Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is Chapter 11 Bankruptcy?”
The number of businesses that filed for bankruptcy in the State of Texas in 2014 declined by twenty percent compared with 2013, according to Androvett Legal Media. Business bankruptcy filings in the Lone Star State are down by more than half over the past five years.
As the United States’ economy sputtered into and out of recession in 2009 and after, the Lone Star State’s economy has boomed, leading some pundits to argue that Texas has been propping up the nation’s economy as a whole.
The state’s booming economy may be reducing bankruptcies, but it was not the booming economy that had a gathering of some 100 Energy Future Holdings advisers gasping in a boardroom last month. The gasps followed the revelation by former American Airlines general counsel Gary Kennedy that the airline’s daily legal bills in its recent bankruptcy ran to about $500,000 per day. Kennedy said businesses should seek alternatives to bankruptcy because, he said, the costs of a business bankruptcies have spiraled out of control.
Martin Sosland, a partner at Weil, Gotshal & Manges—a Dallas, Texas-based law firm—did not dispute that business bankruptcies can be expensive, but he cited the American Airlines bankruptcy as a perfect example of how a Chapter 11 proceeding can help a struggling business “restructure debt, renegotiate union contracts,” and merge or consolidate business operations in a manner that returns the business to profitability. Sosland said the airline’s creditors were paid 100 cents on the dollar and that American’s stock skyrocketed from 31 cents at the time of the bankruptcy filing to over $50 today.