Understanding Corporate Bankruptcy

THE BUSINESS OF
CORPORATE
BANKRUPTCY
A LOOK AT THE BASICS OF BANKRUPTCY
FOR BUSINESS, INCLUDING RECENT TRENDS
WWW.BUNCHANDBROCKLAW.COM
CORPORATE BANKRUPTCY OVERVIEW
No business opens with the intention of going bankrupt. However, due to debt,
revenue challenges, a shaky economic climate, or other unforeseen circumstances,
many owners find that making the tough decision to file for bankruptcy might
actually be the wisest course of action going forward. On an average business day
in 2015, there were 120 corporate bankruptcy filings, some of which were
businesses who were closing up shop, while others were hoping to keep their
doors open and protect their interests. There are two types of bankruptcy that
businesses choose to file, Chapter 7 and Chapter 11.
CHAPTER 7 BANKRUPTCY
 Chapter 7 Bankruptcy, which can be
filed by either businesses or
individuals, is known as a
liquidation bankruptcy.
 In Chapter 7, a portion of your
property may be sold to pay down
your debt.
 Following the sale of your property,
most or all of your unsecured debts
will be discharged.
 This is often the preferred choice of
bankruptcy for businesses that are
closing.
CHAPTER 11 BANKRUPTCY
 Businesses that file Chapter 11
bankruptcy usually do so with the
intention of staying in business, in
hopes to become more profitable
and protect themselves from
creditors.
 Typical debts and contracts that
can be cancelled include secured
and unsecured loans, real estate
leases, supply and vendor
contracts, loan contracts and
executory contracts.
 Plans are made to pay off creditors
over a designated period of time.
 Chapter 11 bankruptcies can be
much more complex than Chapter
7.
SERVICE SECTOR BANKRUPTCIES
 The service industry is the nation’s biggest employers. It’s also one of the
most competitive markets for starting a business.
 It is estimated that one out of four restaurants close, or change ownership,
within their first year of opening. That number rises to somewhere around
60% when a five-year span is taken into account.
 In the first three quarters of 2015, service sector bankruptcies accounted
for 35.95 percent of all business bankruptcies filed in the U.S.
 However, that number is down 10 percent from 2013.
ENERGY SECTOR BANKRUPTCIES
 Energy sector bankruptcies, especially in the coal mining industry, have seen large
increases in recent years.
 U.S. coal production slid 15 percent in the last seven years, forcing many companies to
choose the path of bankruptcy.
 In the third quarter of 2015, mining sector bankruptcies accounted for 10 percent of all
bankruptcies filed.
 National headlines were made when it was reported that Chapter 11 bankruptcy filings
for July of 2015 had jumped 77 percent, fueled in large part by the energy sector -
specifically oil, gas and coal.
 At Bunch & Brock, we have assisted numerous debtors in the coal industry through the
bankruptcy process, including James River Coal Co., Appalachian Fuels, LLC, Cook & Sons
Mining, Inc., and T&T Energy, LLC.
HOSPITALS AND HEALTHCARE BANKRUPTCIES
 A study looking at hospital bankruptcy
filings from 2000-2006 found that 67
percent of these facilities closed, while
the other third remained open after
bankruptcy.
 The same study found that the majority
of the filings were done by smaller
hospitals, which were not part of a
larger health system.
 A USA Today article discussing the
financial difficulties of rural hospitals
looks at Kentucky’s own Nicholas
County Hospital, who found themselves
$2.3 million in debt when they filed for
Chapter 7 bankruptcy.
GENERAL SMALL BUSINESS BANKRUPTCY
 In the third quarter of 2015, 75 percent of all businesses filing for
bankruptcy were businesses generating $2.5 million or less in sales, a grim
outlook for the state of small businesses.
 In that same quarter, 84 percent of all bankruptcy filings were businesses
with less than 50 employees.
 Rising interest rates will make taking on more debt even more difficult for
small to mid-size businesses, leading to a likely increase in the number of
small business bankruptcies.
COMMON MISTAKES WHEN FILING FOR
BANKRUPTCY
 If you are going to choose the path of bankruptcy, or even if you’re
considering doing so in the near future, avoid making these common
mistakes:
 Failure to disclose the whole truth
 Using credit cards before filing - certain charges and cash advances within
90 days of filing may be ineligible for discharge.
 Transferring property prior to filing - this might open you up to
investigation for intent to hinder, delay or defraud a creditor.
 Failure to obey court orders
 Paying debt to family or friends before filing for bankruptcy
HOW WE CAN HELP
The Kentucky bankruptcy law firm of
Bunch & Brock views bankruptcy as an
opportunity for a new financial
beginning, and we have helped
thousands of consumers and
corporations lower the amount of debt
they owe (often eliminating it
completely) while increasing the period
of time in which the debt has to be paid.
We’re familiar with every aspect of
debtor and creditor issues, in and out of
a bankruptcy setting, and we are
committed to supplying you with the
services you need to secure a better
financial future.
ARE YOU
CONSIDERING
BANKRUPTCY?
BUNCH & BROCK IS COMMITTED TO PROVIDING EACH
OF OUR CLIENTS WITH A HIGH LEVEL OF PERSONAL
SERVICE AND REAL SOLUTIONS TO FINANCIAL
TROUBLES. IF YOU ARE A KENTUCKY BUSINESS OWNER
WHO IS CONSIDERING FILING FOR BANKRUPTCY OR
WANTS TO KNOW MORE ABOUT THE PROCESS,
CONTACT US TODAY (859-254-5522) TO SCHEDULE A
FREE CONSULTATION. WE WILL ASSESS YOUR
SITUATION, EXPLAIN THE RULES AND HELP YOU
DETERMINE WHETHER BANKRUPTCY IS RIGHT FOR
YOUR CIRCUMSTANCES.
WWW.BUNCHANDBROCKLAW.COM
1 of 11

Recommended

Bankruptcy Basics – Understanding Your Client's Options - Tully Rinckey PLLC CLE by
Bankruptcy Basics – Understanding Your Client's Options - Tully Rinckey PLLC CLEBankruptcy Basics – Understanding Your Client's Options - Tully Rinckey PLLC CLE
Bankruptcy Basics – Understanding Your Client's Options - Tully Rinckey PLLC CLETully Rinckey
378 views16 slides
Chapter 11 Bankruptcy by
 Chapter 11 Bankruptcy Chapter 11 Bankruptcy
Chapter 11 BankruptcyNancy L. Kourland
362 views5 slides
Team 3 - Pedal Position - Final Design Review by
Team 3 - Pedal Position - Final Design ReviewTeam 3 - Pedal Position - Final Design Review
Team 3 - Pedal Position - Final Design ReviewRuoxin Liu
250 views5 slides
BARÃO DE INOHAN 128 - 22 de junho de 2016 by
BARÃO DE INOHAN 128 - 22 de junho de 2016BARÃO DE INOHAN 128 - 22 de junho de 2016
BARÃO DE INOHAN 128 - 22 de junho de 2016Wagner Pires
314 views8 slides
Ciencias naturales by
Ciencias naturalesCiencias naturales
Ciencias naturalesmajocu
1.1K views5 slides
Understanding Mind Mastery for Complete Mental Health by
Understanding Mind Mastery for Complete Mental HealthUnderstanding Mind Mastery for Complete Mental Health
Understanding Mind Mastery for Complete Mental HealthDr. Gregory Burzynski, MD
275 views12 slides

More Related Content

Viewers also liked

Fish Assemblage in Different Habitats in the Mississippi River by
Fish Assemblage in Different Habitats in the Mississippi RiverFish Assemblage in Different Habitats in the Mississippi River
Fish Assemblage in Different Habitats in the Mississippi RiverKelsey Hoffmann
247 views12 slides
Plantilla para programar ABP en Educación Infantil by
Plantilla para programar ABP en Educación InfantilPlantilla para programar ABP en Educación Infantil
Plantilla para programar ABP en Educación InfantilHilos Para Educar
169 views4 slides
Resume 2016 by
Resume 2016Resume 2016
Resume 2016Jonathan Gatson
89 views4 slides
31673-A by
31673-A31673-A
31673-ARuoxin Liu
175 views5 slides
The Pain of Reform and China's Economic Rebirth by
The Pain of Reform and China's Economic RebirthThe Pain of Reform and China's Economic Rebirth
The Pain of Reform and China's Economic RebirthTom Shaw
194 views5 slides
Weekly Report-8new by
Weekly Report-8newWeekly Report-8new
Weekly Report-8newShah Faisal
219 views6 slides

Viewers also liked(14)

Fish Assemblage in Different Habitats in the Mississippi River by Kelsey Hoffmann
Fish Assemblage in Different Habitats in the Mississippi RiverFish Assemblage in Different Habitats in the Mississippi River
Fish Assemblage in Different Habitats in the Mississippi River
Kelsey Hoffmann247 views
Plantilla para programar ABP en Educación Infantil by Hilos Para Educar
Plantilla para programar ABP en Educación InfantilPlantilla para programar ABP en Educación Infantil
Plantilla para programar ABP en Educación Infantil
Hilos Para Educar169 views
The Pain of Reform and China's Economic Rebirth by Tom Shaw
The Pain of Reform and China's Economic RebirthThe Pain of Reform and China's Economic Rebirth
The Pain of Reform and China's Economic Rebirth
Tom Shaw194 views
Weekly Report-8new by Shah Faisal
Weekly Report-8newWeekly Report-8new
Weekly Report-8new
Shah Faisal219 views
Hazel Nale's documents by Hazel Nale
Hazel Nale's documentsHazel Nale's documents
Hazel Nale's documents
Hazel Nale210 views
Monster Farm Design - Marketing Fundamentals by Kevin Hansen
Monster Farm Design - Marketing FundamentalsMonster Farm Design - Marketing Fundamentals
Monster Farm Design - Marketing Fundamentals
Kevin Hansen101 views
Como selecionar dados em uma tabela que está em outro servidor by Diego Hellas
Como selecionar dados em uma tabela que está em outro servidorComo selecionar dados em uma tabela que está em outro servidor
Como selecionar dados em uma tabela que está em outro servidor
Diego Hellas241 views
Human Brand Experiences in the Time of Tinder by Closer
Human Brand Experiences in the Time of TinderHuman Brand Experiences in the Time of Tinder
Human Brand Experiences in the Time of Tinder
Closer 511 views

Recently uploaded

Thailand by
ThailandThailand
ThailandRoseZubler1
32 views26 slides
Stock Market Brief Deck 121.pdf by
Stock Market Brief Deck 121.pdfStock Market Brief Deck 121.pdf
Stock Market Brief Deck 121.pdfMichael Silva
30 views52 slides
OAT_RI_Ep14 WeighingTheRisks_Nov23_GeopoliticalConcerns.pptx by
OAT_RI_Ep14 WeighingTheRisks_Nov23_GeopoliticalConcerns.pptxOAT_RI_Ep14 WeighingTheRisks_Nov23_GeopoliticalConcerns.pptx
OAT_RI_Ep14 WeighingTheRisks_Nov23_GeopoliticalConcerns.pptxhiddenlevers
18 views4 slides
score 10000.pdf by
score 10000.pdfscore 10000.pdf
score 10000.pdfsadimd007
10 views1 slide
InitVerse :Blockchain development trends in 2024.pdf by
InitVerse :Blockchain development trends in 2024.pdfInitVerse :Blockchain development trends in 2024.pdf
InitVerse :Blockchain development trends in 2024.pdfInitVerse Blockchain
13 views9 slides
The breath of the investment grade and the unpredictability of inflation - Eu... by
The breath of the investment grade and the unpredictability of inflation - Eu...The breath of the investment grade and the unpredictability of inflation - Eu...
The breath of the investment grade and the unpredictability of inflation - Eu...Antonis Zairis
7 views1 slide

Recently uploaded(20)

Stock Market Brief Deck 121.pdf by Michael Silva
Stock Market Brief Deck 121.pdfStock Market Brief Deck 121.pdf
Stock Market Brief Deck 121.pdf
Michael Silva30 views
OAT_RI_Ep14 WeighingTheRisks_Nov23_GeopoliticalConcerns.pptx by hiddenlevers
OAT_RI_Ep14 WeighingTheRisks_Nov23_GeopoliticalConcerns.pptxOAT_RI_Ep14 WeighingTheRisks_Nov23_GeopoliticalConcerns.pptx
OAT_RI_Ep14 WeighingTheRisks_Nov23_GeopoliticalConcerns.pptx
hiddenlevers18 views
score 10000.pdf by sadimd007
score 10000.pdfscore 10000.pdf
score 10000.pdf
sadimd00710 views
The breath of the investment grade and the unpredictability of inflation - Eu... by Antonis Zairis
The breath of the investment grade and the unpredictability of inflation - Eu...The breath of the investment grade and the unpredictability of inflation - Eu...
The breath of the investment grade and the unpredictability of inflation - Eu...
Antonis Zairis7 views
1_updated_Axis India Manufacturing Fund-NFO One pager.pdf by multigainfinancial
1_updated_Axis India Manufacturing Fund-NFO One pager.pdf1_updated_Axis India Manufacturing Fund-NFO One pager.pdf
1_updated_Axis India Manufacturing Fund-NFO One pager.pdf
GroupPresentation_MicroEconomics by BethanyAline
GroupPresentation_MicroEconomicsGroupPresentation_MicroEconomics
GroupPresentation_MicroEconomics
BethanyAline34 views
Teaching Third Generation Islamic Economics by Asad Zaman
Teaching Third Generation Islamic EconomicsTeaching Third Generation Islamic Economics
Teaching Third Generation Islamic Economics
Asad Zaman197 views
QNBFS Daily Market Report November 29, 2023 by QNB Group
QNBFS Daily Market Report November 29, 2023QNBFS Daily Market Report November 29, 2023
QNBFS Daily Market Report November 29, 2023
QNB Group10 views
Development Economics.pptx by Nithin Kumar
Development Economics.pptxDevelopment Economics.pptx
Development Economics.pptx
Nithin Kumar10 views
Pandit No2 Black Magic Specialist In Lahore Black magic In Pakistan Kala Ilam... by Amil baba
Pandit No2 Black Magic Specialist In Lahore Black magic In Pakistan Kala Ilam...Pandit No2 Black Magic Specialist In Lahore Black magic In Pakistan Kala Ilam...
Pandit No2 Black Magic Specialist In Lahore Black magic In Pakistan Kala Ilam...
Amil baba6 views
Debt Watch | ICICI Prudential Mutual Fund by iciciprumf
Debt Watch | ICICI Prudential Mutual FundDebt Watch | ICICI Prudential Mutual Fund
Debt Watch | ICICI Prudential Mutual Fund
iciciprumf6 views
Blockchain, AI & Metaverse for Football Clubs - 2023.pdf by kelroyjames1
Blockchain, AI & Metaverse for Football Clubs - 2023.pdfBlockchain, AI & Metaverse for Football Clubs - 2023.pdf
Blockchain, AI & Metaverse for Football Clubs - 2023.pdf
kelroyjames110 views
TriStar Gold- Corporate Presentation - December 2023 by Adnet Communications
TriStar Gold- Corporate Presentation - December 2023TriStar Gold- Corporate Presentation - December 2023
TriStar Gold- Corporate Presentation - December 2023
Indias Sparkling Future : Lab-Grown Diamonds in Focus by anujadeodhar4
Indias Sparkling Future : Lab-Grown Diamonds in FocusIndias Sparkling Future : Lab-Grown Diamonds in Focus
Indias Sparkling Future : Lab-Grown Diamonds in Focus
anujadeodhar47 views
Stock Market Brief Deck 1129.pdf by Michael Silva
Stock Market Brief Deck 1129.pdfStock Market Brief Deck 1129.pdf
Stock Market Brief Deck 1129.pdf
Michael Silva53 views

Understanding Corporate Bankruptcy

  • 1. THE BUSINESS OF CORPORATE BANKRUPTCY A LOOK AT THE BASICS OF BANKRUPTCY FOR BUSINESS, INCLUDING RECENT TRENDS WWW.BUNCHANDBROCKLAW.COM
  • 2. CORPORATE BANKRUPTCY OVERVIEW No business opens with the intention of going bankrupt. However, due to debt, revenue challenges, a shaky economic climate, or other unforeseen circumstances, many owners find that making the tough decision to file for bankruptcy might actually be the wisest course of action going forward. On an average business day in 2015, there were 120 corporate bankruptcy filings, some of which were businesses who were closing up shop, while others were hoping to keep their doors open and protect their interests. There are two types of bankruptcy that businesses choose to file, Chapter 7 and Chapter 11.
  • 3. CHAPTER 7 BANKRUPTCY  Chapter 7 Bankruptcy, which can be filed by either businesses or individuals, is known as a liquidation bankruptcy.  In Chapter 7, a portion of your property may be sold to pay down your debt.  Following the sale of your property, most or all of your unsecured debts will be discharged.  This is often the preferred choice of bankruptcy for businesses that are closing.
  • 4. CHAPTER 11 BANKRUPTCY  Businesses that file Chapter 11 bankruptcy usually do so with the intention of staying in business, in hopes to become more profitable and protect themselves from creditors.  Typical debts and contracts that can be cancelled include secured and unsecured loans, real estate leases, supply and vendor contracts, loan contracts and executory contracts.  Plans are made to pay off creditors over a designated period of time.  Chapter 11 bankruptcies can be much more complex than Chapter 7.
  • 5. SERVICE SECTOR BANKRUPTCIES  The service industry is the nation’s biggest employers. It’s also one of the most competitive markets for starting a business.  It is estimated that one out of four restaurants close, or change ownership, within their first year of opening. That number rises to somewhere around 60% when a five-year span is taken into account.  In the first three quarters of 2015, service sector bankruptcies accounted for 35.95 percent of all business bankruptcies filed in the U.S.  However, that number is down 10 percent from 2013.
  • 6. ENERGY SECTOR BANKRUPTCIES  Energy sector bankruptcies, especially in the coal mining industry, have seen large increases in recent years.  U.S. coal production slid 15 percent in the last seven years, forcing many companies to choose the path of bankruptcy.  In the third quarter of 2015, mining sector bankruptcies accounted for 10 percent of all bankruptcies filed.  National headlines were made when it was reported that Chapter 11 bankruptcy filings for July of 2015 had jumped 77 percent, fueled in large part by the energy sector - specifically oil, gas and coal.  At Bunch & Brock, we have assisted numerous debtors in the coal industry through the bankruptcy process, including James River Coal Co., Appalachian Fuels, LLC, Cook & Sons Mining, Inc., and T&T Energy, LLC.
  • 7. HOSPITALS AND HEALTHCARE BANKRUPTCIES  A study looking at hospital bankruptcy filings from 2000-2006 found that 67 percent of these facilities closed, while the other third remained open after bankruptcy.  The same study found that the majority of the filings were done by smaller hospitals, which were not part of a larger health system.  A USA Today article discussing the financial difficulties of rural hospitals looks at Kentucky’s own Nicholas County Hospital, who found themselves $2.3 million in debt when they filed for Chapter 7 bankruptcy.
  • 8. GENERAL SMALL BUSINESS BANKRUPTCY  In the third quarter of 2015, 75 percent of all businesses filing for bankruptcy were businesses generating $2.5 million or less in sales, a grim outlook for the state of small businesses.  In that same quarter, 84 percent of all bankruptcy filings were businesses with less than 50 employees.  Rising interest rates will make taking on more debt even more difficult for small to mid-size businesses, leading to a likely increase in the number of small business bankruptcies.
  • 9. COMMON MISTAKES WHEN FILING FOR BANKRUPTCY  If you are going to choose the path of bankruptcy, or even if you’re considering doing so in the near future, avoid making these common mistakes:  Failure to disclose the whole truth  Using credit cards before filing - certain charges and cash advances within 90 days of filing may be ineligible for discharge.  Transferring property prior to filing - this might open you up to investigation for intent to hinder, delay or defraud a creditor.  Failure to obey court orders  Paying debt to family or friends before filing for bankruptcy
  • 10. HOW WE CAN HELP The Kentucky bankruptcy law firm of Bunch & Brock views bankruptcy as an opportunity for a new financial beginning, and we have helped thousands of consumers and corporations lower the amount of debt they owe (often eliminating it completely) while increasing the period of time in which the debt has to be paid. We’re familiar with every aspect of debtor and creditor issues, in and out of a bankruptcy setting, and we are committed to supplying you with the services you need to secure a better financial future.
  • 11. ARE YOU CONSIDERING BANKRUPTCY? BUNCH & BROCK IS COMMITTED TO PROVIDING EACH OF OUR CLIENTS WITH A HIGH LEVEL OF PERSONAL SERVICE AND REAL SOLUTIONS TO FINANCIAL TROUBLES. IF YOU ARE A KENTUCKY BUSINESS OWNER WHO IS CONSIDERING FILING FOR BANKRUPTCY OR WANTS TO KNOW MORE ABOUT THE PROCESS, CONTACT US TODAY (859-254-5522) TO SCHEDULE A FREE CONSULTATION. WE WILL ASSESS YOUR SITUATION, EXPLAIN THE RULES AND HELP YOU DETERMINE WHETHER BANKRUPTCY IS RIGHT FOR YOUR CIRCUMSTANCES. WWW.BUNCHANDBROCKLAW.COM

Editor's Notes

  1. http://www.bunchandbrocklaw.com/corporate-bankruptcy/chapter-11/ http://www.bunchandbrocklaw.com/chapter-7-bankruptcy/
  2. http://www.bloomberg.com/bw/stories/2007-04-16/the-restaurant-failure-mythbusinessweek-business-news-stock-market-and-financial-advice http://www.financierworldwide.com/fw-news/2015/10/20/q3-2015-sees-us-corporate-bankruptcies-plateau
  3. http://www.nytimes.com/2015/07/18/business/energy-environment/coal-miners-struggle-to-survive-in-an-industry-battered-by-layoffs-and-bankruptcy.html?_r=1 http://www.bunchandbrocklaw.com/corporate-bankruptcy/chapter-11/ http://www.wsj.com/articles/u-s-bankruptcy-filings-jump-77-in-july-paced-by-energy-sector-1438892376
  4. http://www.healthcarefinancenews.com/news/hospital-bankruptcies-result-trends-not-single-event http://www.usatoday.com/story/news/nation/2014/11/12/rural-hospital-closings-federal-reimbursement-medicaid-aca/18532471/ http://www.bunchandbrocklaw.com/chapter-7-bankruptcy/
  5. http://www.financierworldwide.com/fw-news/2015/10/20/q3-2015-sees-us-corporate-bankruptcies-plateau http://www.bunchandbrocklaw.com/corporate-bankruptcy/
  6. http://www.bunchandbrocklaw.com/bankruptcy-mistakes/
  7. http://www.bunchandbrocklaw.com
  8. http://www.bunchandbrocklaw.com/contact-us/