High-end bankruptcies in Florida give rise to business reorganizations

June 15, 2013 (Press-News.org) A multi-million dollar data company in Florida filed for bankruptcy within months of the death of its founder. At the time of Hank Asher's death early this year, TLO LLC was in the process of a company-wide turnaround. With the loss of its visionary -- a man known as one of the fathers of data mining techniques -- the company floundered financially and corporate officers are seeking to restructure the business by filing for Chapter 11 bankruptcy.

Chapter 11 bankruptcy

Filing for bankruptcy does not always lead to the demise of a struggling business. Company owners wishing to continue the legacy they have created may be able to restructure their business -- creating a financially stronger company -- by reorganizing through bankruptcy.

Chapter 11 bankruptcies primarily allow businesses with high debt loads to reorganize without having to close their doors. First, a petition is filed which stays most, if not all, collection actions against the business entity, typically for the duration of the reorganization process. Second, the company creates a reorganization plan. A court oversees the plan and determines whether it is acceptable. Upon confirmation of the plan by the court, debts are discharged or renegotiated according to the specifics outlined in the plan.

The goal of a Chapter 11 reorganization is to make the company or business profitable again. By discharging, renegotiating or repaying the company's debts, it may attain solid financial footing by the end of the process.

Throughout the bankruptcy process, disputes between creditors and debtors are common. For example, TLO shareholders and its co-chief operating officers disagree about the value of the company. Conflicting information reports that the company's value is somewhere between $30 and $300 million, according to court filings. The co-CEOs are attempting to contribute up to $6 million of their own money to help with corporate financing but a shareholder is opposing that effort because he does not wish for them to increase their equity holdings.

While the untimely death of an important person within a company does not always lead to financial difficulties, there are a number of other factors which may do so, such as a downturn in the market, natural disaster, fraudulent dealings or simple mismanagement. If your business is suffering from financial distress, you have options that may include workouts, corporate restructuring and various forms of bankruptcy.

Consult a lawyer

No matter your level of outstanding debt, it is wise to consult an experienced bankruptcy and debt-restructuring attorney. A lawyer knowledgeable about high-end business bankruptcy and litigation matters can explain your options and help you find a solution most favorable for your situation.

Article provided by Jennis & Bowen, P.L.
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