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Los Angeles Corporate & Securities Law Blog

A closer look at how Chapter 11 bankruptcy for businesses works

As was recently discussed in this blog, at times, and in some situations and circumstances, an important option for a business struggling with debts to consider may be the Chapter 11 reorganization bankruptcy process. To determine if Chapter 11 bankruptcy is the best option for a struggling business, it is important for any party considering filing for Chapter 11 bankruptcy to understand the process and what it provides.

Once a party has filed a petition for Chapter 11 bankruptcy, which begins the bankruptcy process, the filing party is required to file with the court a list of liabilities and assets; a schedule of income and expenditures; a statement of financial affairs; and a list of unexpired leases and executory contracts. The filing party is also required to submit a reorganization plan to the court.

Nutrition company files for Chapter 11 protection

People who go into business in Los Angeles, across the country and all over the world are investing their time and money into an endeavor and trying to make it into a success. Those who have a deep knowledge of their work and enjoy what they are doing might have boundless enthusiasm, but in some cases a lack of knowledge in business matters that can mean their business will run into trouble. That trouble often results in the need to file for Chapter 11 to deal with creditors who want to recover what they are owed. Knowing how to move forward with a business bankruptcy is an important aspect to save the business or to move on and clear one's debts.

A former competitive bodybuilder who gained worldwide fame for his work in the gym and success on the contest stage began a supplement business bearing his name. Unfortunately, the cash flow failed to meet his debts and he is been forced to file for Chapter 11 bankruptcy. The company is $16 million in debt in spite of an expected $45 million in sales in 2014. The company has declined from its highest level of $78 million in sales in 2011. Other supplement companies are interested in taking this company on with one interested in keeping the founding bodybuilder on staff. The company had been investigated by the FDA for some claims of its products.

Business litigation may be the answer

As businesses work together to increase efficiency and production, it is no surprise that disputes arise. Most often these disputes come about because one business did not follow through with a task or promise that was laid out in an agreement. Other times, there is a question about an agreement itself and who is promising what. When these situations arise, it is sometimes best to proceed with business litigation.

Litigating a business matter in a court of law may seem intimidating to some individuals. However, a court of law is sometimes necessary to hold a business to its promises and ensure that a high standard is maintained in the business world. When efforts of settlement and discussions have failed, business litigation is one way to handle any dispute at hand.

Mergers exist in many forms

Businesses may come together in a merger for many reasons, but a main goal of a company merger is to increase profits and efficiency. As businesses contemplate a possible merger in the future, they may want to keep in mind that many different types of mergers exist, and it is important to find the right one to fit their needs.

A conglomerate merger occurs between two unrelated business activities. These mergers can occur between two companies that have nothing in common or between two businesses that are looking to extend their area of business. Horizontal mergers, on the other hand, occur between two businesses operating in the same industry and are looking at extending their market share. Vertical mergers are between two companies that exist together in supplying products to a certain supplier.

Is bankruptcy the right option for me?

Even as the economy recovers, some businesses are still struggling to make ends meet. Although they have worked diligently, business owners may find themselves in a difficult place, with many crucial decisions to make. Company owners must consider all options in order to find the best solution for their businesses.

An option that has become more and more appealing to business owners who face financial difficulties is bankruptcy. Different types of bankruptcies exist that can fulfill a company's particular needs. When a business has a plan for recovery and wants to use bankruptcy as a way to get back on its feet, a Chapter 11 bankruptcy may be appropriate. This type of bankruptcy forces the business to create a reorganization plan and detail ways in which it will repay its debts in the future.

Handling business litigation

Businesses do not always agree when they are working together in the corporate world. Sometimes, these disagreements come to pass. Sometimes, however, they can elevate to the point that a lawsuit develops. When a business litigation issue arises, it is important to remain calm and seek legal assistance.

A business litigation case may develop because you want another business to take a certain action, another business wants you to take action or both. In the event that you want to take action, you will have to serve specific legal paperwork on the other company to inform them of a pending lawsuit. An experienced legal professional typically drafts this paperwork.

California tech firm to merge with Kitara Media Corporation

Oftentimes, as companies partner together in projects and in business, they begin to realize that they make an exceptional team. These realizations often lead to questions of merger and greater profits. In many cases, moving forward with a merger allows the two companies to have greater levels of efficiency that prove most beneficial in the long run.

An announcement was recently made in the New Jersey business press that California-based Future Ads LLC will be merging with Kitara Media Corporation of Jersey City. The two companies have worked together previously in the realm of advertising. The businesses complement each other and it is believed that they will make even more solid progress as a strong united front.

How can chapter 11 bankruptcy help a struggling business?

Starting a business in the United States can be risky. With an economy that has ebbed and flowed over the last several years, it is no wonder that some businesses are having a difficult time surviving. Fortunately, options exist for businesses that want to restructure their company and continue their operations.

A Chapter 11 bankruptcy is very different from other forms of bankruptcy in that it allows the business to remain alive. The process begins with a petition to the bankruptcy court. The business must then also file a lists of its assets and liabilities, contracts and leases, income and expenditures and a statement of financial affairs. Once the paperwork is filed, the debtor remains a debtor in possession until a plan of business reorganization is confirmed. Sometimes, a trustee will be appointed for the company.

Overview of businesses and securities laws

Businesses in California have many concerns. Along with ensuring their business remains profitable, their employees work hard and their costs remain low, businesses oftentimes must ensure that they are following federal securities laws. When these laws are not being followed properly, it may mean big trouble for small businesses.

Securities laws were created as a result of the stock market crash in the 1920's. The laws require businesses to disclose information to investors in order to properly reflect meaningful information. Two primary sets of securities laws exist today: the Securities Act of 1933 and the Securities Exchange Act of 1934.