Chapter 13 on commercial property

[beanot]

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[HHM]

If the offer is going to come in the next 2 weeks, why file before that?

The problem with pulling out and then refilling is that the automatic stay terminates in 30 days after filing of the 2nd BK and therefore he loses the protection of creditors.

[papa0881]

HHM what is an automatic stay exactly?

[beanot]

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[HHM]

When you file BK, that creates an order which is called "Automatic Stay". The Automatic stay is the legal mechanism by which you are able to stop creditors.

The Automatic stay is created the second you file BK (but as a practical matter, it takes some time to notify creditors that the automatic stay is in place). The automatic stay last from the second you filed to the date of discharge.

In a chapter 13, you basically get 1 free shot to pull out...it is called a voluntary dismissal, and you can do that at anytime by simply filing some paperwork with the court. HOWEVER, if, for some reason, you need to refile, shortly after dismissing, the automatic stay in your second case will only last 30 days (unless you can show cause why it should be extended).

On a side note, was the business a separate legal entity (i.e LLC, Corporation etc)? If so, the chapter 13 won't even really help with the business creditors, because a corporate entity CAN'T file chapter 13 BK.

If there really may be an offer in the next 2 weeks, I would probably hold off on filing until you find out one way or the other. If no offer comes in, then I would file BK in earnest. Given the way the new BK law works, you really don't want to be messing around with mulitple filings.

[beanot]

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[beanot]

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[car67]

I think the business must close or sale. Chapt 13 does nothing for business related activities. Chapt 13 shields the owner for personal liabilities for debt that would have to be repayed over 5 years.

Close the business forget the business if its a loss and walk away.
If creditors chase personally and then its to much to bear or pay
then chapt 7 would be more appropiate after the business has been closed for 6 months or more and provided the person filing doesnt have any further assets or new sources of income thats over the median for your state... I think this is the route you will see.

[HHM]

I think the business must close or sale. Chapt 13 does nothing for business related activities. Chapt 13 shields the owner for personal liabilities for debt that would have to be repayed over 5 years.

Close the business forget the business if its a loss and walk away.
If creditors chase personally and then its to much to bear or pay
then chapt 7 would be more appropiate after the business has been closed for 6 months or more and provided the person filing doesnt have any further assets or new sources of income thats over the median for your state... I think this is the route you will see.

Since the operation is a Sole-Prop, they would get the benefit of the automatic stay in a chapter 13 against ALL debts. And it would buy them some time, if that is all they needed. Even if secured creditor's moved fast to try and lift the automatic stay, that process still takes around 30 days.

My gut feeling is that this sale is really a wing and prayer and is probably not going to go through, so that I is why I am repeatedly cautioning this person to NOT use the chapter 13 to stall creditors if the deal is really supposed to close in the next 2 weeks.

[beanot]

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