Bankruptcy, Creditors Rights, and Alternatives to Bankruptcy

Bankruptcy

One of the toughest situations for a business owner or executive is when your business is experiencing financial distress. While most people fear the word bankruptcy, if your business has consistent cash flow, even if it cannot meet all of its current debt obligations, you may be able to save your business by means of a bankruptcy proceeding known as a Chapter 11 reorganization. Chapter 11 of the Bankruptcy Code allows a business to address its debts in an orderly fashion by means of payment plan and enables that business to emerge as a stronger and healthier entity at the conclusion of the process.

At the Law Office of Ethan Ganc, we understand that bankruptcy, more so than almost any other, requires thoughtfulness and compassion from your legal advisors. Our lawyers provide expert counsel to business owners who have questions about whether they can restore their business to health. We will listen to your needs, counsel you on your options, and if possible, we can help your business rehabilitate and reorganize under Chapter 11. Moreover, some small businesses can now take advantage of a less expensive, more streamlined version of Chapter 11 called Subchapter V.

If Chapter 11 is not feasible, we can help your business liquidate by means of a Chapter 7 bankruptcy proceeding or provide out-of-court alternatives to a bankruptcy proceeding.

We provide the following services to owners and executives of distressed businesses:

  • Counseling the business owner(s) or board of directors about bankruptcy and non-bankruptcy options
  • Preparing the necessary paperwork for the bankruptcy filing, including the bankruptcy petition, schedules of assets and liabilities, and other documents
  • Representing the business debtor in all aspects of Chapter 11 and 7 proceedings
  • Prosecuting avoidance (preference and fraudulent transfer) actions – recovery of certain payments made to creditors prior to the bankruptcy filing

Creditors Rights

As a business owner or executive, you may find yourself in a situation where a client, customer, vendor, or any other party that owes you money files for bankruptcy protection. At the Law Office of Ethan Ganc, our attorneys can help you protect your interests in property and/or right to payment in a bankruptcy proceeding.

Our firm has significant experience in all aspects of bankruptcy practice, and our lawyers have represented many constituencies in the bankruptcy process, including debtors, individual creditors (with particular experience representing financial institutions), creditors’ committees, and liquidating trustees.

We provide the following services, among others:
  • Defending the rights of creditors in Chapter 11, 7, and 13 cases
  • Representing creditors committees in Chapter 11 cases
  • Purchasing assets from a bankrupt entity
  • Preparing and filing involuntary bankruptcy petitions – a bankruptcy proceeding initiated by creditors
  • Filing proofs of claim – claims for monies due in a bankruptcy proceeding
  • Prosecuting non-dischargeability actions – adversary proceedings to determine whether a debt will survive bankruptcy
  • Prosecuting motions for relief from stay
  • Prosecuting motions for payment of administrative expenses in Chapter 11 cases
  • Defending avoidance (preference and fraudulent transfer) actions – actions to recover certain transfers made by a bankrupt entity prior to the bankruptcy filing

For business owners with personal guarantees of business debts:

If you are the principal (owner) of a small or medium-sized business, you may have been required to sign a personal guarantee. When you sign a personal guarantee, you agree to be liable on an individual basis for the business’s obligations, e.g., under a line of credit or commercial lease. If your business is unable to meet these financial obligations for whatever reason, you will be personally responsible for any debts you guaranteed.

While there may be reasons why it does not make sense legally or economically for the business itself to file for bankruptcy protection, it might nonetheless be beneficial for you to file for personal bankruptcy to discharge the liability under the personal guarantees. In such cases, we advise business owners about their bankruptcy options and represent them in a personal bankruptcy proceeding, either Chapter 7 or 13, where appropriate.

Alternatives to bankruptcy

Sometimes a formal bankruptcy proceeding may not be the best option for your business; instead, an out-of-court option may be preferable. Our attorneys can also help you with alternatives to bankruptcy such as:
  • Composition agreement – an out-of-court settlement with creditors that allows the company to continue as a going concern
  • Assignment for the benefit of creditors – a state court liquidation proceeding similar to a Chapter 7 bankruptcy