Learn about corporate bankruptcy and the options open to business considering filing for bankruptcy. Learn about chapter 7 vs chapter 11 and the best path for your financial recovery.

1. THE BUSINESS OF
CORPORATE
BANKRUPTCY
A LOOK AT THE BASICS OF BANKRUPTCY
FOR BUSINESS, INCLUDING RECENT TRENDS
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2. CORPORATE BANKRUPTCY OVERVIEW
No business opens with the intention of going bankrupt. However, due to debt,
revenue challenges, a shaky economic climate, or other unforeseen circumstances,
many owners find that making the tough decision to file for bankruptcy might
actually be the wisest course of action going forward. On an average business day
in 2015, there were 120 corporate bankruptcy filings, some of which were
businesses who were closing up shop, while others were hoping to keep their
doors open and protect their interests. There are two types of bankruptcy that
businesses choose to file, Chapter 7 and Chapter 11.

3. CHAPTER 7 BANKRUPTCY
 Chapter 7 Bankruptcy, which can be
filed by either businesses or
individuals, is known as a
liquidation bankruptcy.
 In Chapter 7, a portion of your
property may be sold to pay down
your debt.
 Following the sale of your property,
most or all of your unsecured debts
will be discharged.
 This is often the preferred choice of
bankruptcy for businesses that are
closing.

4. CHAPTER 11 BANKRUPTCY
 Businesses that file Chapter 11
bankruptcy usually do so with the
intention of staying in business, in
hopes to become more profitable
and protect themselves from
creditors.
 Typical debts and contracts that
can be cancelled include secured
and unsecured loans, real estate
leases, supply and vendor
contracts, loan contracts and
executory contracts.
 Plans are made to pay off creditors
over a designated period of time.
 Chapter 11 bankruptcies can be
much more complex than Chapter
7.

5. SERVICE SECTOR BANKRUPTCIES
 The service industry is the nation’s biggest employers. It’s also one of the
most competitive markets for starting a business.
 It is estimated that one out of four restaurants close, or change ownership,
within their first year of opening. That number rises to somewhere around
60% when a five-year span is taken into account.
 In the first three quarters of 2015, service sector bankruptcies accounted
for 35.95 percent of all business bankruptcies filed in the U.S.
 However, that number is down 10 percent from 2013.

6. ENERGY SECTOR BANKRUPTCIES
 Energy sector bankruptcies, especially in the coal mining industry, have seen large
increases in recent years.
 U.S. coal production slid 15 percent in the last seven years, forcing many companies to
choose the path of bankruptcy.
 In the third quarter of 2015, mining sector bankruptcies accounted for 10 percent of all
bankruptcies filed.
 National headlines were made when it was reported that Chapter 11 bankruptcy filings
for July of 2015 had jumped 77 percent, fueled in large part by the energy sector -
specifically oil, gas and coal.
 At Bunch & Brock, we have assisted numerous debtors in the coal industry through the
bankruptcy process, including James River Coal Co., Appalachian Fuels, LLC, Cook & Sons
Mining, Inc., and T&T Energy, LLC.

7. HOSPITALS AND HEALTHCARE BANKRUPTCIES
 A study looking at hospital bankruptcy
filings from 2000-2006 found that 67
percent of these facilities closed, while
the other third remained open after
bankruptcy.
 The same study found that the majority
of the filings were done by smaller
hospitals, which were not part of a
larger health system.
 A USA Today article discussing the
financial difficulties of rural hospitals
looks at Kentucky’s own Nicholas
County Hospital, who found themselves
$2.3 million in debt when they filed for
Chapter 7 bankruptcy.

8. GENERAL SMALL BUSINESS BANKRUPTCY
 In the third quarter of 2015, 75 percent of all businesses filing for
bankruptcy were businesses generating $2.5 million or less in sales, a grim
outlook for the state of small businesses.
 In that same quarter, 84 percent of all bankruptcy filings were businesses
with less than 50 employees.
 Rising interest rates will make taking on more debt even more difficult for
small to mid-size businesses, leading to a likely increase in the number of
small business bankruptcies.

9. COMMON MISTAKES WHEN FILING FOR
BANKRUPTCY
 If you are going to choose the path of bankruptcy, or even if you’re
considering doing so in the near future, avoid making these common
mistakes:
 Failure to disclose the whole truth
 Using credit cards before filing - certain charges and cash advances within
90 days of filing may be ineligible for discharge.
 Transferring property prior to filing - this might open you up to
investigation for intent to hinder, delay or defraud a creditor.
 Failure to obey court orders
 Paying debt to family or friends before filing for bankruptcy

10. HOW WE CAN HELP
The Kentucky bankruptcy law firm of
Bunch & Brock views bankruptcy as an
opportunity for a new financial
beginning, and we have helped
thousands of consumers and
corporations lower the amount of debt
they owe (often eliminating it
completely) while increasing the period
of time in which the debt has to be paid.
We’re familiar with every aspect of
debtor and creditor issues, in and out of
a bankruptcy setting, and we are
committed to supplying you with the
services you need to secure a better
financial future.

11. ARE YOU
CONSIDERING
BANKRUPTCY?
BUNCH & BROCK IS COMMITTED TO PROVIDING EACH
OF OUR CLIENTS WITH A HIGH LEVEL OF PERSONAL
SERVICE AND REAL SOLUTIONS TO FINANCIAL
TROUBLES. IF YOU ARE A KENTUCKY BUSINESS OWNER
WHO IS CONSIDERING FILING FOR BANKRUPTCY OR
WANTS TO KNOW MORE ABOUT THE PROCESS,
CONTACT US TODAY (859-254-5522) TO SCHEDULE A
FREE CONSULTATION. WE WILL ASSESS YOUR
SITUATION, EXPLAIN THE RULES AND HELP YOU
DETERMINE WHETHER BANKRUPTCY IS RIGHT FOR
YOUR CIRCUMSTANCES.
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