In Pennsylvania and all other jurisdictions, when a business encounters disruptive disputes with a major creditor, the company may attempt in some circumstances to resolve the issues by filing a Chapter 11 petition. That is the general intent behind a recent Chapter 11 bankruptcy filing by a business entrepreneur and his wife in another state. The bank, Wells Fargo, has obtained an order providing for a receiver to liquidate the companies in which the couple have an ownership interest and to pay the bank with the proceeds.
Wells Fargo claims that there is about a $28 million balance due on the loan. The debtors claim that the bank’s scorched earth tactic is harming the companies seized and leaving the employees in a state of uncertainty. The debtors claim in their filing that the receivership is conducting an “unorganized and unaccountable private liquidation that preferred only one creditor, Wells Fargo…” They also claim that the procedure is destroying the business assets of the companies seized.
The bank has characterized the filing as an attempt to avoid paying on the Wells Fargo loan. The debtors, however, allege that they filed the bankruptcy to assure that all debts are paid in full and so that one creditor is not favored over all others. The couple filed the petition on July 24 in the U.S. Bankruptcy Court in Denver. They listed assets in the range of $100 million to $500 million and debts between $10 million and $50 million.
One of the benefits to the debtors is that the filing of the Chapter 11 bankruptcy has stayed the receivership from going forward with any further asset-depleting activities against businesses in which the debtors have an interest. This will assure employees of those companies that there is a revitalized commitment to preserving their jobs. It also brings a modicum of security to those businesses, allowing them to operate as usual without a devastating interference from one creditor. A Pennsylvania business facing debt load problems can obtain a thorough and accurate assessment of its options by consulting with an experienced bankruptcy attorney in the community.
Source: bizjournals.com, “Colorado entrepreneur Craig Walker explains why he filed for Chapter 11 bankruptcy protection“, Cathy Proctor, Aug. 21, 2015