Chapter 11 Business Bankruptcies in the Eastern District of KY
While Chapter 7 and Chapter 13 of the U.S. Bankruptcy Code get more publicity, Chapter 11 can be quite advantageous under the right circumstances. Sometimes referred to as a “reorganization” bankruptcy, cases filed under this chapter seek debt relief similar to that granted by Chapter 13. Although individuals are eligible, Chapter 11 is most often used by companies, both large and small.
Nationwide, the American Bankruptcy Institute reports that total bankruptcy filings were down 10 percent in calendar year 2015. While total commercial filings during 2015 were 30,018 (a 14 percent drop from 2014), commercial chapter 11s registered their first year-over-year percentage increase since 2009. Just over 5,300 commercial chapter 11s were filed during 2015, which represented a two percent increase over the 5,188 commercial chapter 11s filed the previous year.
The US Bankruptcy Court for the Eastern District of Kentucky received 19 Chapter 11 filings in 2014, 40 Chapter 11 filings in 2015, and five such filings through March of 2016. The Eastern District of Kentucky Bankruptcy Court is based in Lexington, covers 67 counties and has divisions in Ashland, Covington, Frankfort, London, and Pikeville. Currently, the Chief Judge hears motions for Chapter 11 cases in Lexington on the last Wednesday of every month. A second judge hears motions for Chapter 7, 11, and 12 cases in Lexington on the third Thursday of every month. These hearings are held at the U.S. Bankruptcy Court on East Vine Street. The judges visit the division locations at other times, though some matters are held by videoconference.
A Chapter 11 petition is properly filed with the bankruptcy court serving the area where the debtor has its primary place of business or is incorporated. The bankruptcy judge may decide any matter connected with a bankruptcy case, such as eligibility to file or whether the proposed reorganization plan should be approved. Large corporations that have filed Chapter 11 include General Motors, United Airlines, and K-Mart, but many filings are not particularly newsworthy. Here are a few that have been filed in the Eastern District of Kentucky Bankruptcy Court:
The New Horizons Medical Center (formerly Owen County Hospital) filed for bankruptcy protection under Chapter 11 last June. Among other liabilities, the facility’s chief executive officer listed $4.33 million owed to the USDA as part of a $5.4 million loan, a disputed litigation debt of $5 million to its largest unsecured creditor, and a second disputed litigation debt of $900,000 to another creditor. In January, the bankruptcy court ruled that the Center’s assets could be purchased by St. Elizabeth Healthcare with an initial investment of $1 million.
Kentucky and West Virginia mining company Trinity Coal Corporation was forced into an involuntary Chapter 11 bankruptcy in 2013 after it stopped repaying $120 million to lenders led by Credit Agricole SA, ING Capital LLC, and Natixis. The creditors claimed they had lost faith in the ability of the company’s management and that of its parent to turn the business around. The company was able to successfully resolve “more than $325 million of claims under its plan, which included a capital infusion of more than $150 million by affiliates of Trinity’s ultimate parent company, Essar Global Fund.” The plan gave 100 percent of the common equity of the reorganized company to Essar, and paid or compromised all secured, administrative, and priority claims.
A 33-unit franchisee of the popular restaurant chain Applebee’s sought to close eight restaurants and to reorganize its operations in Chapter 11 bankruptcy after unsuccessfully seeking concessions from landlords in order to keep the unprofitable units open. Listing assets of between $1 million and $10 million and liabilities in that same range, AppleIllinois LLC hoped to sell its additional units and its franchise development rights for the market.
SouthEast Telephone, Inc., a Kentucky-based telecommunications company, filed a voluntary petition for relief under chapter 11 and was approved to sell substantially all of their business assets to a wholly-owned subsidiary of Lightyear Network Solutions for approximately $7.3 million.
Serious financial problems require serious legal representation. With over 35 years’ experience in our community, the Fayette County chapter 11 bankruptcy lawyers at Bunch & Brock are committed to providing each of our clients with a high level of personal service and real solutions to financial troubles. If you are a business owner who is considering filing for bankruptcy or wants to know more about the process, contact us today to schedule a free consultation. We will assess your situation, explain the rules and help you determine whether bankruptcy is right for your circumstances. Let us work with you to make the best plan for eliminating or repaying your debts. We encourage you to contact our office by calling 859-254-5522 or filling out this online form.