During the economic downturn, a lot of corporations, both large and small, were forced to file for bankruptcy. Filing for bankruptcy is never easy. The creditors get easy access to all, or most, of the debtor’s assets in many bankruptcy cases. Chapter 11 bankruptcy may help the debtor reorganize the assets in order to facilitate loan repayment.
Recently, the famed teen fashion line Wet Seal filed for Chapter 11 bankruptcy. With the economic constraints plaguing many Texas families, children and teens are allegedly being given less allowance by parents to buy clothes. It has been one of the major factors of the retail line being forced to file Chapter 11 bankruptcy. It was determined that the retail store had approximately $103 million in debt when it filed the Chapter 11 bankruptcy proceeding.
A Chapter 11 bankruptcy proceeding is a reorganization process, as opposed to the liquidation process under Chapter 7. However, there are certain constraints when filing Chapter 11 bankruptcy proceedings. If it has been determined in court in the previous 180 days that the debtor was willfully defaulting on repay the loan, a Chapter 11 bankruptcy proceeding may not be initiated under Texas law.
Additionally, the debtor is mandatorily required to go through credit counseling by an approved agency of the state in order to qualify for Chapter 11 bankruptcy proceedings. The counseling may be done on an individual basis or in a group counseling session. There may be certain exceptions to the rule in case of emergency proceedings.
After such criteria are met, the debtor may file for Chapter 11 with a petition. Many people find it beneficial to consult legal professional help in order to understand the legal complexities of such financial proceedings.
Source: West Texas News, “Wet seal files for chapter 11bankruptcy protection Friday,” Jan. 21, 2015