You might have recently heard or read that Radio Shack filed for “Chapter 22” bankruptcy. This is not an actual chapter of bankruptcy. Rather, it is a euphemism used to refer to a company’s second bankruptcy, playing on the idea that two Chapter 11 filings equal one Chapter 22 filing. Radio Shack’s most recent bankruptcy filing comes just two years after its 2015 restructuring. This time, its current owner, General Wireless Operations, aims to liquidate all of its remaining retail locations.
Sometimes, it is necessary to file for bankruptcy more than once. Through bankruptcy, an indebted individual or company can have its debts discharged. For Chapters 7 and 13, the two bankruptcy chapters utilized by individuals looking to discharge personal debt, filers must wait specific lengths of time after their first discharges to have new cases discharged. With Chapter 11, there is no limit. However, if the company that wants to liquidate all or substantially all of its assets, it cannot have debt discharged if it has had debts discharged through a Chapter 7 or 11 bankruptcy case filed within the past eight years.
Filing Your Second or Subsequent Bankruptcy Claim
Although time limits are usually not imposed on companies seeking a second Chapter 11 bankruptcy filing, it is important that you take the time to truly think this choice over if you are considering it. Bankruptcy is not a process to be taken lightly and if you are not careful, you can fall into one of the following traps:
Your case is rejected because the plan is not feasible, which means you will have to take the time and resources to create another, and potentially another, restructuring plan; or
Your case is accepted and you restructure the company, only to continue to lose money.
Speak with an experienced bankruptcy lawyer to determine if this is truly the right course of action for your company. It might be better for your company to avoid the costs of bankruptcy and take steps internally to fix its profitability issues, such as reducing its workforce or making changes to its business model. There are many ways to fix cash flow and profit issues and bankruptcy is only one. Although every strategy has far-reaching repercussions, bankruptcy’s can be the most difficult to overcome.
Work with an Experienced Mundelein Bankruptcy Lawyer
Whether you are facing your first bankruptcy or you have filed in the past and are now considering your second or subsequent filing, speak with an experienced bankruptcy lawyer to determine your rights and what you can expect from the bankruptcy process. If your previous filing was of a different chapter or if you are now facing different circumstances than you faced with your first bankruptcy, it is important to understand how this bankruptcy will be different. To speak with an experienced bankruptcy lawyer, contact our team at Newland & Newland, LLP today to schedule your initial consultation in our office. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.
(image courtesy of Coolcaesar at the English language Wikipedia)