Kentucky Retail Bankruptcy

Bankruptcy is rarely the first option, but many times it’s the best. With a changing marketplace, a shift to online shopping and a somewhat sluggish rebound from the last recession, retail bankruptcy has become a fairly common practice. Investopedia, an online business magazine, states that already in 2017 stores including The Limited and Wet Seal have filed for Chapter 11 bankruptcy; and they consider several other stores to be at risk of default, including Sears, Claire’s, Nine West Holdings, the 99 Cent Stores, J. Crew, True Religion Apparel and others. While most people would prefer to avoid it, bankruptcy is not a bad thing; it’s an opportunity for a fresh start, to take the lessons you’ve learned and to start over, and it’s one of the most effective tools to get a business back on track.

Let Brunch & Brock Help You

A retail bankruptcy can be complicated and at times frustrating, so it’s best to seek professional legal help. If you’re considering a retail bankruptcy in Kentucky, contact the law offices of Brunch and Brock. For more than 35 years Bunch & Brock has served the legal business needs of businesses and residents of Kentucky, acting as lead counsel in several high-profile cases, including those of Samaritan Hospital, Foodtown Supermarkets, Black Diamond Coal Company and Appalachian Fuels.

How Does Retail Bankruptcy in Kentucky Work?

There are two major types of bankruptcy generally employed for businesses. After a consultation, we will help you decide which is best for you.

Chapter 7

Chapter 7 bankruptcy is essentially a liquidation. In this category, the business stops operating and all its assets are turned over to a trustee to be sold. The money is then given to creditors in order to pay off as much debt as possible, from credit cards to leases. This type of bankruptcy does not eliminate personal liability for a business – only a personal bankruptcy or negotiation with creditors may do that.

Chapter 11

Chapter 11 bankruptcy is essentially a reorganization of the business. Through the bankruptcy, the business is given a specified amount of time to repay debts under negotiated terms. In the restructuring phase, the business, for the most part, may stay under the guidance of the owner. An attorney is essential in these circumstances to negotiate favorable terms.

Avoid Bankruptcy Mistakes

If you do decide bankruptcy is the best option, there are several actions that can potentially skew the process. Some of these include:

• Not disclosing the whole truth – If you do not disclose the entire situation of your bankruptcy and the court finds out, penalties may be excessive and an attorney may not be able to help.
• Using credit cards before filing – Some charges done too close to filing will not be eligible for bankruptcy.
• Transferring property prior to filing – This could potentially spur an investigation of intent to hinder, delay or defraud a creditor.
• Disobeying court orders – This could potentially skew the whole process. The filing may not be accepted, investigations may begin, and other undesirable consequences result.
• Paying family or friend debt before filing – Again, this may spur investigations about defrauding creditors.

Retail Bankruptcy Expectations

While bankruptcy may be the logical and reasonable choice in efforts to either save or salvage what the owners can from a business, the results will not always be exactly what you wish for.  Alix Partners, a consulting firm, encourages business owners to plan ahead and be prepared; they also offer several tips for the debtor,  including:

Buy Time – Alix Partners suggests that one of the most important elements of either type of bankruptcy is to take as much time as possible. Evaluate and lists assets, debts, property and inventory that may be liquidated. This extra time also gives the business more time to restructure and to find out what model will work best when the business emerges from the bankruptcy.

Be Realistic – They suggest that firms that are successful emerging from bankruptcy are those that have planned ahead. Instead of counting on hypotheticals, debt restructuring and other solutions that may never materialize, it is important to create and implement a realistic plan based on factors that can be counted on.

Understand the Market – It is vital to understand the options available so far as capital is concerned. For example, strengthen the relationship with investors; know how much capital is available to reorganize and how willing existing and potential lenders are to contribute to the business.

Focus on Operations – One of the most useful tools in bankruptcies is the ability to reject store leases. It is important to do a complete analysis and, if the situation warrants it, to downsize operations by closing underperforming stores.

Let Bunch & Brock Help

The landscape of business bankruptcies is often intricate and confusing. For your best opportunity to get the most out of your bankruptcy, it’s essential to get legal help. Rely on the people with experience, who have been there before and know the ins and outs of the law.

For more than 35 years, the attorneys at Bunch and Brock have been serving our community and the entire state of Kentucky with their legal needs. We don’t just serve the community – we are members of it, and we look forward to helping our neighbors when they need us. If you have legal questions or would like to set up an appointment contact us online or call us at 859.254.5522.

Attorney Matthew Bunch

Matt handles complicated bankruptcies and debt restructuring in Chapters 11 and 13 for both individuals and companies. He has also negotiated with multiple creditors on behalf of his clients to avoid bankruptcy. Matt is the firm’s lead litigator and handles contract disputes, certain personal injury claims and general litigation. [ attorney bio ]