Chapter 11 bankruptcy is a method that many will use to try and get back into a better financial situation. For individuals and for businesses, it is a strategy for debt relief and to address other issues. This can be beneficial provided it is handled correctly. When filing for Chapter 11 bankruptcy, having legal help can make all the difference between a filing being allowed to go forward to achieve the desired ends and one that does not. This is especially important in a business bankruptcy.
An offshore energy company based in Houston has filed for Chapter 11 bankruptcy. The company was facing a problem with its attempts to file as recently as August, when their creditors sought to have the company placed into an involuntary Chapter 7 bankruptcy. When the petition for that was filed by the creditors, the company was accorded 20 days to respond. It was subsequently allowed to have the case converted to a voluntary Chapter 11. In September, the judge decided that the case meets the requirements to be a complex Chapter 11 bankruptcy.
If the case needs to have special scheduling and various procedures because of it combining size and a vast number of parties involved, it can be considered a complex case. This is how the U.S. Bankruptcy Court in the area handles such situations. The company has also been confronted with criminal charges because of an explosion at a rig in 2012. The charges result from the 41 citations the company received in November of 2013 linked to the explosion.
Chapter 11 can be complicated regardless of the circumstances. If, as in this case, there are creditors who want to have the bankruptcy filed under a certain chapter and the company wishes to file under a separate chapter, it can lead to difficulty. Add in that the company is also facing legal charges from an incident and it adds up to many potential roadblocks. Those who are considering Chapter 11 must ensure that they fully understand what they have to do to move forward with the petition and that they are on solid legal ground to do so. First, they should have sound legal advice by speaking to an experienced attorney.
Source: Houston Business Journal, "Houston offshore driller moves forward with Chapter 11 bankruptcy," Olivia Pulsinelli, Nov. 12, 2015