Should you consider taking the road to Chapter 11?
By now, no one needs to tell you that there is a virtual epidemic of bankruptcy cases throughout the country. If you are the CEO of Hertz, Neiman Marcus, or GNC, your company is represented by a large, multi-national firm with a bankruptcy department. You probably had many meetings with lawyers in numerous departments, from corporate to litigation, to bankruptcy, before you decided to file. But, what if your company is not Hertz or Neiman Marcus? Maybe you have a corporate counsel or maybe you only hire an attorney when you need one. Up until March of this year, your business was doing just fine. Perhaps you were on your way to record profits. Then, the pandemic hit. You had to shutter your business in March and, even though you did not have any revenue for three months, you still had expenses. You applied for and received PPP money, but that only lasted for a few months. Your business has reopened, but it is taking longer than you thought for business to return. In the meantime, the landlord wants the rent paid (or the bank wants the mortgage paid). Is bankruptcy an option? You have thought about it, read what you can on the internet, but what you found there doesn’t answer your questions. Enter Behind the Curtain—Chapter 11 From the Inside. This is going to be a series of columns taking you through the bankruptcy process. But this will be a series with a twist. These columns will give you insight, not only from the perspective of a bankruptcy attorney but, probably more importantly, from the perspective of someone whose company not only weathered the chapter 11 process but is now doing better than it ever has. Each post will address a different portion of the bankruptcy process. It will start with what happens before a filing occurs; going through why one client decided that bankruptcy should be an option and the steps taken to get to the actual filing, including negotiations that could keep the company out of bankruptcy. Next will be the beginning phases of the case, including filing the petition and first-day motions. After that will be a post on the automatic stay. This will be followed by the documents that are filed by at the beginning of the case and the first meeting of creditors; cash collateral and post-petition financing; contacts and leases; the claims process; and, finally, the plan of reorganization. It is hoped that this will provide both an explanation of the bankruptcy process, as well as a road map.