In the United States, different types of bankruptcy processes are available to a wide range of filers, from individual consumers filing Chapter 7 bankruptcies to large corporations filing complex Chapter 11 cases.
At Behm Law Group Ltd., we primarily work with individuals filing for Chapter 7 liquidation or Chapter 13 reorganization bankruptcy, but we also provide filing services and legal protection to local businesses qualifying for either Chapter 7 or Chapter 13, and we provide Chapter 12 bankruptcy services for family farmers and fishers in the southern Minnesota region. Outside of small business and individual bankruptcy, other types of businesses like LLCs, corporations, and partnerships will typically utilize Chapter 11 bankruptcy to handle large debt loads and complex financial situations. While we don’t provide services for Chapter 11 debt settlement in Mankato, MN, and the region, at Behm Law Group Ltd., we still think clients need to understand the role that all types of bankruptcy play in the U.S. economy.
One significant segment of the total annual bankruptcy cases filed in the United States is comprised of “mega” bankruptcies. Typically, Chapter 11 “mega” bankruptcy cases address either the debt loads of numerous affiliated and closely intertwined businesses which are consolidated into a single “mega” bankruptcy case or the large-scale debts of a single massive business entity.
What Makes a Bankruptcy “Mega?”
To fit into the category of “mega bankruptcy,” a business must have either $1 million or more in debt or have over 1,000 creditors involved. Business entities who file “mega” cases can also have relatively large debt loads that may be under $1 million or have under 1,000 creditors involved, but have a significant degree of public involvement, interest and investment. Some of the most famous mega cases include the bankruptcy cases of Lehman Brothers in 2008 (involving over $691 billion), General Motors in 2009 (involving over $82 billion), and Washington Mutual in 2008 (involving over $327 billion). Many of the recent retail store bankruptcies that have been filed in the United States, including JCPenney, Toys“R”Us, and Sears, have also been handled as mega cases.
How are Mega Cases Handled?
Because of the massive sizes of many businesses involved in mega cases, the outcomes of such cases can have rippling economic effects that the majority of other business and individual cases do not. Bankruptcy courts must monitor these potential effects and handle the cases accordingly to eliminate any negative large-scale economic impacts as much as possible. This usually means mega cases are handled with a much higher degree of involvement and scrutiny by bankruptcy court judges. Bankruptcy judges will often employ Omnibus hearings to allow the parties to review and generally “clean up” or “pre-package” a case before allowing it to proceed through the full court process. Omnibus hearings are pre-trial hearings through which the parties to the bankruptcy gather records and financial documents, and then outline the overall situations of the bankruptcy filer and the creditors involved. Such Omnibus hearings help alleviate the overall administrative stress “mega” bankruptcy cases can place on the court and court staff and provide a more direct and expeditious way to handle the complexities of such cases.
To learn more about how our attorneys can help you use bankruptcy for debt settlement in Mankato, MN, contact Behm Law Group Ltd. by calling at (507) 387-7200 or emailing firstname.lastname@example.org.