Bankruptcy Alert: Colonial Surety Company v. Weizman was decided in the last year by the 1st Circuit Court of Appeals. It is an important decision of which every debtor and counsel should be aware. In a nutshell the practice had been that if a debtor whose chapter 7 case was deemed to be a no asset case had discovered a forgotten creditor after the discharge had entered and the case had closed, then the previously forgotten creditor's claim was considered discharged without having to re-open the case to add the new creditor. That is the practice in certain other circuits, but it is no longer acceptable in the 1st Circuit (which includes Massachusetts, Maine, New Hampshire, Rhode Island and Puerto Rico).

The Weizman decision says that if a forgotten creditor is discovered after the case is closed, then you must reopen the case to list the newly remembered creditor or else the claim might not be discharged. This means that in order to avoid a reopening of a chapter 7 case a debtor must list every possible person with a claim against him or her in the original filing whether that claim is contingent or otherwise. Both debtor and counsel cannot be cavalier about listing or failing to list creditors in no asset cases. Imagine the shock you might have after you receive a discharge and that long lost evil brother-in-law calls you up and says, "I want you to pay me that $5,000 I lent you four years before the bankruptcy." Suddenly you remember that you did not list him as a creditor. Uh oh! There may be other defenses, but why squander the best one: the bankruptcy discharge.

If you think planning for a Chapter 11 is limited to the legal aspects, then think again! Planning for a Chapter 11 case does not simply mean speaking to accountants and attorneys. Smart people will speak with marketing and advertising people to plan and abate any negative impact from a filing. Some debtors will have spent weeks working with customers, letting them know that the company will likely file and being brutally honest with them as to why. They will also show their customers what they plan to do survive and emerge from Chapter 11 a stronger company. Limiting discussions to attorneys and accountants limits your chances for success.  Smart attorneys will know that there are aspects to a Chapter 11 case beyond the letter of the law.

If you operate any sized business, it is never to late to do some strategic planning if for nothing else than to avoid the pitfalls that could lead to a bankruptcy and personal angst. Tempted to borrow against the house to get cash for the business? Have you or your spouse been asked to personally guaranty bank debt, trade credit or a lease? These are among the red flags that should give you warning to proceed with caution.

Call a bankruptcy attorney; let me repeat that: speak with a bankruptcy attorney. They know the mistakes that people make; they make their living from those mistakes. Most tend to be strategic lawyers. Several years ago, an article in the American Bar Journal observed that the strategic lawyer is what clients should be seeking and that kind of lawyer is not easy to find. The strategic lawyer is the counselor, the type of lawyer that used to be the standard of the legal profession, but that law schools seldom develop today. Such lawyers provide the best services at the least cost to benefit the clients they serve. Can't find one? Call me; I know a few and would be happy to recommend them.

Interesting aspect of this practice is that some calls are from people who will tell us that they need a Chapter 11 without having spoken to an attorney with expertise in the area.  That is one thing that you must discuss with an attorney who concentrates in Chapter 11 cases. Sometimes they may have a different perspective. Nevertheless click here to see what he or she will likely need from you to prepare for the filing of a Chapter 11 case: Chapter 11 Checklist.

Success? Ever wonder what the success rate of a Chapter 11 case is? Then take a look at these papers co-authored by Professors Warren and Westbrook: 11Success and Success11. A successful Chapter 11 case starts well before the petition is filed. It starts with financial planning, analyzing costs, identifying problem areas and determining what you want the result to be as you emerge from Chapter 11. Some businesses file bankruptcy because they are overtaken by events; the more successful businesses plan the filing before the petition is filed.

Tales From The Crypt. Are you a director or officer of a business which is either approaching insolvency or already there? Need to read something scary? Read about deepening insolvency.

Time is fleeting. Have you explored the alternatives? Have you investigated pre-bankruptcy planning or asset protection devices. Do you know your options? Have you considered bankruptcy? Do you know the differences among chapters 7 and 11? Are you aware that you can liquidate a business outside of bankruptcy?  Before you act, get the answers.

This website will  give you an idea of what bankruptcy entails and the forms that are required. This is not intended to give you legal advice, but merely links to information that will help you to get  informed. We cannot give all the advice to meet every situation, so do your research. Click on the INFORMATION link to the right to use those links. After reading the information, you should contact an attorney who concentrates in insolvency and bankruptcy law.

If you are an individual thinking of filing a bankruptcy and need to know how the process of filing gets started, then click on the FILING INFO link to the right and review the materials there. Then you may call us for a referral.

You can call or fax us at 888-472-0008 for further information. 

Note that the information contained on this website is general in nature and is not intended to be a substitute for legal advice. Neither this site nor your access to it creates an attory-client relationship between you and us.