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Bankruptcy for Borders Being "Finalized". Well, Tut, Tut, Tut.

By Joseph McDaniel, Esq.

See, a lot of folks come into my office, and they've read that you can do this or that or the other thing in a Chapter 11 Bankruptcy.

And some of the stuff people think you can do in a Chapter 11 Bankruptcy is actually possible, and some of it is a compound of wishful thinking and Wacky Tabaccy.

The news article in The Wall Street Journal that discussed a possible Chapter 11 filing for Borders Bookstores demonstrates my point.

See, a big bankruptcy case, with lots of resources, gets "finalized" prior to filing. That is, classes of creditors are already set up, loans are in place, and a Chapter 11 Disclosure Statement and Plan are set to go.

First Day Orders, which are common in large cases to permit a large number of housekeeping details (like continuing to pay employees on time, or jacking them around for nine days pay, whichever management prefers), are dusted off and polished to a high gloss.

And the legal fees for a Chapter 11? As a remarkably practical matter, if you have to ask, you can't afford them.

Which is why I bend myself into a pretzel trying to find a combination of approaches that will get the benefits of a Chapter 11 in a tiny business case; but without filing the Chapter 11.

And often it works pretty well.

Bear in mind that being a bankruptcy lawyer, whether you handle consumer or commercial (and I've done a lot of both in thirty years), is a little like being an Oncologist, when the patient is in Stage Four. 

Or a Veterinarian.

That is, generally people walk in with a flat puppy business after it's been run over by an 19-wheeler.

And they say, "Can you make my puppy well?"

And sometimes I can.

But the difference between a tiny business, a small business, and a big business, and the respective sorts of bankruptcy that make sense for them...well, that's why they call it the practice of law.


 

Full post as published by Arizona Bankruptcy Attorney Blog on February 04, 2011 (boomark / email).