This website is not intended to be a legal advice resource. It is only meant to be used for educational reasons. Please don’t take any action or refrain from taking any action based on what you’ve read on this website. This website, article, or link may contain outdated, incorrect, or irrelevant information. It is your obligation to speak with an expert attorney who can apply current legislation or laws to your personal situation in a professional manner.
There is no attorney-client relationship formed by using this site or communicating with Law Office of D.L. Drain or any of our employees. Please read the complete disclaimer for additional information.
It is vital that you seek legal advice from a qualified attorney on your individual situation. It will almost certainly cost you less to seek advice before acting than it will to repair your mistakes.
Diane L. Drain, bankruptcy attorney, retired law professor, mentor and community spokesperson.
Bankruptcy is a very complicated interplay of several laws and should not be undertaken without adequate representation.
A business bankruptcy has its own set of challenges. For your own sake, please do not use attorneys who do not practice bankruptcy law full time. Many bankruptcy lawyers offer free or very low cost initial consultations.
Our focus is on quality, not quantity.
In order to give each of our clients the attention that they deserve we only take a certain number of clients at a time.
– Diane L. D
EASING THE STRESS OF FILING A BUSINESS BANKRUPTCY
A well planned bankruptcy takes a lot of work. It cannot be filed without you doing your part of the work, then we will do our part (like partners, each with specific duties).
BANKRUPTCY, OR THE THOUGHT OF BANKRUPTCY, IS VERY SCARY.
Over the years we discovered that any bankruptcy is so daunting for our clients that many freeze and are unable to help themselves. This is even more overwhelming when the debtor is a company. As the owner of the company you probably used your personal funds to try to keep the business afloat and you may have guaranteed some of the debts, including leases. Now you are emotionally exhausted and financial broke.
We try to make access to information as simple as possible.
We use technology to make this complicated process as simple as possible. We focus on education, ease of access to information and setting up a process that puts clients in control. This allows our clients to proceed at their own pace rather than the lawyer’s.
The minimum time to process a bankruptcy to filing is usually 2 weeks.
This includes the client completing all the steps listed below and two meetings with Diane. The average is 6 weeks, with many clients taking several months.
WHAT WE NEED FROM YOU:
What is your responsibility?
- You must be willing to spend time doing the work.
- You must be willing to follow directions.
- You must have access to a computer and use emails regularly.
- You must keep your appointments.
- You must bring the paperwork we need when requested.
- If you do your job then I promise I will do mine.
IN EXCHANGE FOR YOU DOING THE ABOVE WE PROMISED THE FOLLOWING:
TO KEEP OUR FEES TO A MINIMUM
In order to keep our fees to a minimum we must ask for your commitment to follow directions. If your situation becomes more complicated, or you choose not to follow our directions, then our fees must be increased to cover the additional time spent in your file.
ACCESS TO INFORMATION
We also promise to make access to information available when you need it, not just when we are in the office.
THE PROCESS
Lastly, we try to make the process as easy for you as practically possible.
THE ENTIRE PROCESS FOR A BUSINESS BANKRUPTCY
The court videos explain the basics of bankruptcy. These videos are primarily designed for the consumer, but the processes are very similar for a business bankruptcy. I know this bankruptcy is for your business, but it still important that all active officers of the company understand the process. Therefore, we ask that all the primary principals of the business watch these videos, because they will be required to sign a statement authorizing the company to file the chapter 7 bankruptcy (assuming you elect to go in that direction). Chapter 7 for a business means the business will be closed. If you want to continue operating the business you need to ask for a referral to a chapter 11 attorney (we know several excellent attorneys).
Make sure to fill out all the information on the questionnaire and finish watching the videos. Otherwise Jay will call and ask that you finish the form. Diane will then call you to discuss the questionnaire and answer any of your questions. Her goal for this conference will be to give you direction for protecting assets, unwinding mistakes that may have already made and what not to do before filing for bankruptcy.
This call is normally 30 to 60 minutes. At the end of the free phone consultation Diane will be able to give you a fee for our services, or refer you to an attorney who can help with a chapter 11 (designed to keep the business operating).
This is a secure web site where you will list all your company’s assets, creditors (account number, address, etc) and answer several other questions. The challenge is this format is designed for a bankruptcy for people, not a business, but the information and instructions are basically the same. Make sure to read the directions with each question, call our office if you have questions.
Once this information is completed we will receive an email notification. Jay will review the form. If there is anything missing he will ask you to provide that information. If not, then Diane will call you to set a first appointment which last approximately 3 hours. Moral: read the directions first. Once you have read the directions you are welcome to call Jay for clarification.
Diane will send you an email confirming your first meeting date. In that email she will give you a list of the documents to bring to your first meeting (some may have been uploaded to MyCase), plus the retainer and disclosure agreements. Please review both and bring to your first meeting.
You will meet with Diane for approximately 3 hours.
- At this meeting you will review the information which was downloaded into our bankruptcy software.
- You will read and sign the retainer and disclosure agreements; plus provide us a copy of the signed corporate resolution authorizing the filing of the bankruptcy.
- Also, all the documents listed in the letter and on our web site: tax returns, bank statements, etc.
- You will be expected to pay one half of the retainer.
- You will be given directions about using the company’s bank accounts, paying company bills, etc.
- At the end of the meeting you will receive a copy of the bankruptcy documents to take with you to review for accuracy.
- Now that you have paid a retainer you can now give our contact information to the company’s creditors.
Call us for your next meeting once you have reviewed all the documents from our first meeting and are ready for us to file the company bankruptcy in the next few days.
- At the second meeting you are to bring back the edited bankruptcy documents.
- Pay the balance of the retainer, plus the court filing fee.
- You must know the actual balance in all bank accounts at that time. The bankruptcy trustee will seize the bank accounts.
- You also must bring any new documents since your first meeting: such as new demands, law suits or bank statements.
- At this meeting you and Diane will talk about the timing for the filing of the bankruptcy.
Please call only after you completed the review and edit of the documents.
Normally the bankruptcy will be filed shortly after our second meeting. But, if there are changes after that meeting it is imperative that you call Diane immediately. Once the bankruptcy is filed it cannot be undone.
Now that the bankruptcy has been filed you will receive a copy of the documents that Diane filed with the Bankruptcy Court. Along, with a cover letter with more information about the meeting with the trustee which is called the “creditor’s meeting”. Sometimes one or two creditors might be there, but we won’t know until the actual meeting.
All the creditors listed in the documents will receive notice of bankruptcy. This mailing will come from the Bankruptcy Notice Center and may take 1-2 weeks before the creditors receive the notice. It may also take the creditors another 1-2 weeks to update their computers. Therefore, if a creditor contacts you after the bankruptcy is filed you should give them the case number (that is on the letter that I sent you when we filed the case), plus my contact information. By federal law that creditor or collection company is to stop contacting you.
The bankruptcy trustee assigned to your case will send you a letter requesting certain documents, such as bank statements, tax returns, business operating information, inventory request and other documents. You already provided most of this information to our office, but there may some information that you have not provided. Each trustee has a different list of document so we are never certain exactly what documents you will need until we receive the letter from the trustee. Normally, the trustee’s letter comes to you, not to us. Therefore, once you receive the letter immediately forward a copy to Jay, along with any requested documents you did not provide us. There is a very tight deadline to send these documents to the trustee so please contact Jay immediately.
Call Jay if you do not receive this letter within 14 days after your bankruptcy is filed; he will follow up with your trustee.
Both you and Diane will attend the meeting with the trustee (creditors’ meeting). If you fail to provide the requested information to the trustee then most likely the creditors’ meeting will be postponed. This will mean that you have to come down for another meeting, plus Diane will charge a fee for this additional time.
The trustee may request that your company surrender certain valuable items for liquidation. Those funds will be paid to your company’s creditors, after the trustee takes a percentage and the trustee’s attorney may also take their fees.
In a chapter 7 a business does not receive a discharge, unlike an individual who does. The trustee will eventually close the file, but you will not receive a formal notice from the court. You can check with Diane to determine whether or not the final paperwork has been filed, but it may take several months to a couple of years. Normally once the case is closed by the court Diane will send an email with that information.
After a bankruptcy is filed, but before the discharge is entered, the secured creditor, or landlord, could request the debtor sign a new contract “reaffirmation agreement”. This new contract has the exact terms as the original, Section 524(c) and (k) delineates several documents, disclosures and procedures that must be followed by the creditor in obtaining this new contract. It must be approved by the Court in order to be binding on the debtor. It is most likely no debtor’s attorney will sign the reaffirmation agreement because 524(k)(5)(B) requires that the debtor’s attorney certify that the debtor will be able to make the payments. This is not only ludicrous, but how could anyone certified anyone’s ability to pay a future debt. This is also new law and few, if any, creditors will be able to follow the complicated procedures.
Below is a link to a video of Bankruptcy Judge Eileen W. Hollowell, filmed explaining the reaffirmation process.
