It’s not unusual for a story that makes headlines to make a good teaching tool for me to use to help Bankruptcy in Indiana readers better understand the way the new bankruptcy laws in Indiana are meant to work. The Wall Street Journal account of two national restaurant chains that filed for bankruptcy and “didn’t tell” is just such a story….
When the owners of the Garcia’s and the Garfield’s restaurant chains filed Chapter 11 bankruptcy towards the end of last year, they filled out the bankruptcy paperwork minus some very important information: a complete list of creditors. Why? Apparently the owners didn’t want their 1400 employees to find out.
Having helped thousands of owners file small business bankruptcy in Indiana, I know that, in order for the system to work well, all the parties need to be treated as fairly and as equally as possible. That means that all creditors need to have the same information about what’s going on, including the people working for the company!
The bankruptcy profession apparently agreed, with many lawyers for bankruptcy commenting that, if a company’s bankruptcy isn’t well-publicized, creditors could be accidentally left off a repayment plan (they wouldn’t have received notice of the Meeting of Creditors). Let me explain that somewhere between Day #20 and Day #40 after bankruptcy documents have been filed with the court, a creditors’ meeting is held.
Now, as I’ve often explained in these Bankruptcy in Indiana articles, the bankruptcy system is there to provide a much-needed safety net for honest debtors who, very often due to forces beyond their control, cannot take financial care of themselves and their families without help. But for the system to continue to function, the facts of each situation must be fairly and completely stated, so that the interests of both the creditors and the debtors can be addressed by the court.
The employees are “creditors” because they need to have the company pay them their promised wages and benefits. Therefore, it was important that they be notified of the filing along with everyone else.
And that brings me to another important point: the most important role an attorney plays is to make sure the financial disclosure process is done correctly. In my more than 26 years of bankruptcy law practice in Indiana, I've worked with tens of thousands of people, and helped fill out thousands upon thousands of details on hundreds of thousands of forms. All of this is part of the process. Believe me, that process is so much smoother when things are done right, and honestly, from the beginning!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg