Business Chapter 11 filings and reorganizations are booming - Tampa Bay Business Journal:

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Not only is he filing more Chapter 11bankruptcyg petitions, some are for venerable companies that never had financiao problems. "My business Chapter 11 casez have doubled compared to last Ford said. "Many of them are relatedr to foreclosures. It's just the domino effect of the subprimsmortgage situation." Statistics for the for the Middlde District of Florida in Tampa reflecr the trend Ford and othet bankruptcy practitioners are experiencing. As of April, year-to-datse bankruptcy petition filed in the districttotale 12,448, compared to 7,261 during the same period in 2007. Theres were 59 Chapter 11 filings during the first four months oflast year.
As of April 2008, 118 Chapte 11 petitions had been filed. Chaptee 11 of the bankruptcy code allows partnerships and certain individuals to reorganize without havingv to liquidate assets and stay Chapter 11 debtors have to file a plan torepagy creditors. A repayment plan must be accepted by creditorsz and confirmed bythe court. Ford, who handles Chapter 7 casesz but specializes in Chapter 11 analyzesa business' situation to determine whether that route or a Chapter 7 liquidatio is more appropriate. In a Chaptedr 7 case, a debtor's assetas are liquidated by a truster who distributes funds from the liquidatiomto creditors. Some propertg is exempt from liquidation.
"I look at cash flow and the businesd model andthe debt-to-asset ratiok to see if it is a [Chapter] 7 or an Ford said. "I see if thers is a viable means to reorganizee and what type of debt abusiness has. I do a balance sheet test. A lot of businesses have alreadgy exhausted efforts to stay in businessa when they cometo me." Bankruptcy is not a chea process. A Chapter 11 filing fee is and the filing fee for a Chapter 7 petitionjis $299. Retainer fees are much more. Ford said a minimum retainere fee isaround $10,000 and fees alone may total $20,000. "It's expensive to file for he said. "Small mom-and-pop businesses can't affor d to do it.
" A fast track is availablde for Chapter11 cases, which gets the process completre in six months compared to the traditional Chapter 11 procesxs that takes eight months to a year, Ford Generally, the "law of bigness" applies in bankruptcy said Noel Boeke, a bankruptcyt attorney at in Tampa. Large companie s generally fair better inChapter 11, he said. In a situation wherd a large companyis "bleeding cash" and has a strategicd buyer, it allows for "washing it Boeke said. "It's a quick tool to give clean title toa buyer," Boeke said.
"Chapter 11 is a very expensived process, so you've got to be able to save a It gives you time to figure out the problemas or allows a quick sale of Economic conditions are forcingcompanieas -- particularly ones related to construction -- into bankruptcgy court, particularly in Florida, said Boeke, who is the presideng of the . Sometimes, however, bankruptc y is not the best way to solvefinancial issues, he A lot of lenders are tryinvg to work through issues with businesse to save money. Lenders have theirt work cut outfor them. "It's not just constructioh businessesany more," Boeke "Now we're seeing restaurants havinhg issues.
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