Hard Times Are Everywhere

Hard Times Are EverywhereAtlantic City isn’t the only place where the gambling industry has collapsed, and the host area may well collapse along with it.

Lawyers for Caesar’s Palace in Las Vegas are scheduled to be back in an Illinois courtroom to explain why their client refuses to consent to an involuntary bankruptcy petition. According to the Committee of Unsecured Creditors in the involuntary Chapter 11 proceeding, Caesar’s Entertainment Operating Company (CEOC) has a “statutory duty” to consent to the proceeding.

This is the case of the dueling bankruptcies. CEOC filed a voluntary Chapter 11 petition on January 15 in Chicago, three days after junior lenders filed an involuntary Chapter 11 in Delaware. Roughly $500 million in cash is at stake, and if the junior lenders win this hearing, they get the money.

Bankruptcy Procedure

A little over a hundred years ago, after the state’s silver mines played out, Nevada was so broke that there was talk of merging it with California or Arizona. CEOC is probably just the first domino to fall in Las Vegas, so that talk may soon resurface.

But, back to Camden. A typical Chapter 7 bankruptcy may take about six to nine months, from start to finish. Of course, not all cases are typical. Generally, however, the case goes something like this:

  • Voluntary Petition: Since no one forces the debtor to go to court, this petition can usually be amended or withdrawn at almost any time. Involuntary petitions are not uncommon in business proceedings, if the creditors feel the business has money to pay its debts but is refusing to do so.
  • Motion to Lift Stay: Occasionally, a creditor will seek special permission from the judge to ignore the automatic stay and foreclose on a lien. These motions are only filed when payments haven’t been made on a car loan or mortgage.
  • Notice: All creditors must receive notice of the proceeding. This process is largely mechanical.
  • 341: The “meeting of creditors” is really nothing of the sort, because moneylenders very rarely show up. In a Chapter 7, the debtors must typically furnish some documents, like recent tax returns, verify their identities, and answer a few yes/no questions from their attorneys.
  • Discharge: After the trustee is satisfied that everything is in order, the judge signs an order forgiving all unsecured debts. The debtors now have their fresh starts.

Additionally, the debtors must complete two counselling courses. One must be done prior to filing, and the other must be completed prior to discharge. These classes can usually be taken online.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500

Understanding the Different Bankruptcy Filings

Whether you face personal financial challenges or your business has fallen upon difficult times, there are options available to you under the federal bankruptcy laws. This blog post provides an overview of the most common types of bankruptcy filings.

Chapter 7 Liquidation Proceedings

The protections afforded by Chapter 7 are available to individuals or businesses. In a Chapter 7 petition, you are allowed to permanently discharge most types of debts. In a Chapter 7 bankruptcy you are allowed to “exempt”, or protect your assets up to a certain dollar amount. In more than 95% of all bankruptcy cases, the person who files for bankruptcy keeps everything they own. In a Chapter 7 certain debts, such as child support arrearages, student loans (except under very limited circumstances) and some tax obligations cannot be wiped out. Each state has its own state based exemptions, and some states allow their residents to use the federal property exemptions. You may choose the state or the federal exemption, but not both. Once your Chapter 7 bankruptcy if finalized, you are permanently freed from any obligation to repay any debts discharged.

In 2005 Congress added a “means test” to the bankruptcy code. The means test determines if an individual or couple makes “too much money” to file a Chapter 7 and instead must file a Chapter 13 to repay their creditors a portion of what is owed. For the vast majority of people looking to file bankruptcy, the means test has no impact on their ability to file Chapter 7. It is simply false to say that you “can’t file a Chapter 7” or that is it “much harder to file a Chapter 7”.

Chapter 13 Reorganization

In a Chapter 13 filing, you pay what you can afford to pay on a monthly basis. Your creditors will receive a percentage of what they are owed, and at the end of your three to five year plan, the balance of what is owed is wiped out.. As with a Chapter 7 petition, you are immediately protected by the automatic stay, which prohibits your creditors from calling, writing or taking legal action against you to recover a debt.. As long as you honor the terms of the reorganization plan, your creditors may not make any other attempts to collect any debts you owe.

Chapter 11 Business Reorganization

A Chapter 11 bankruptcy filing allows a business to obtain the protection of the automatic stay, and to negotiate new payment arrangements with creditors, in a fashion similar to the Chapter 13 petition for individuals. Chapter 13 has debt limits and if an individual owes more money than what is allowed, they will be required to file a Chapter 11 case in order to reorganize.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.