Bankruptcy Lawyer Blog

This is a very sensitive subject these days. The New York times has a great bankruptcy article about Detroit and the plans for a possible restructuring plan.

Congress has given Detroit’s flailing automakers less than two weeks to come up with a restructuring plan that would justify giving them tens of billions of taxpayer dollars and ensure that they have a reasonable path back to profitability. We hope it is a good plan, because the lame-duck Congress does not have a choice.

We will see if something gets done about Detroit and the Big 3 automakers. I have mixed emotions about the whole thing, but right now I think of this quote: “If your daughter falls out of a tree, you don’t stop to lecture her on climbing trees, you take her straight to the hospital.” Well clearly the Big 3 need a long stay in the infirmary, we shall see if that comes to pass.

Every passing day seems to bring a little bit more negative news for the nations businesses. There is an alarming number of retailers that are entering Chapter 11. Most of the time Chapter 11 is a short stay for a retailer so they can reorganize, obtain new financing and then get things rolling. These days Chapter 11 is a short stay, where financing can’t be found and most companies are skipping right to liquidation.

And most of the news around business bankruptcies are focused on large public corporations. There’s been little discussion of the small businesses out there, but they are hurting. Many small companies should consult with a business bankruptcy attorney to determine their options. If you have an LLC or an S Corp and things are going downhill it would be wise to consult with a lawyer, especially if you are considering putting in more of your own money. There are assets that you will not want to put into your business and doing this too often could be construed as “piercing the corporate veil” and will make it harder for you to separate your business assets from your personal assets - a critical step in the event of a business bankruptcy.