Filing a Franchiser Bankruptcy

Columbus GA Bankruptcy Lawyer

Commercial bankruptcy differs from franchiser bankruptcy. There are unique procedural and legal requirements that make it significantly different from a commercial bankruptcy filing. Franchiser bankruptcy filing is not advised without legal representation and hence consulting an experienced bankruptcy attorney is highly recommended. There are certain basic elements that are associated with franchiser bankruptcy filing which should be clearly understood by debtor prior to filing.

Franchiser bankruptcy can be filed under chapter 7 or chapter 11. Chapter 7 would lead to discharge of all business debts. Chapter 7 would ultimately lead to the termination of concerned business inclusive of all franchise operations in their current forms. Chapter 11 on the other hand allows a reorganization and repayment of debts through a new plan which can be utilized to pay off at least some part of the debt. This type of bankruptcy keeps business in operational mode during course of bankruptcy. So the first step towards filing a franchiser bankruptcy is decision of which chapter to file under.

Debtor needs to consult his accountant and his bankruptcy attorney in order to make an informed decision with regard to this. Taking into consideration his present financial situation and if a bankruptcy would be able to salvage it, is a decision that he has to take after due diligence of his business and prospective bankruptcy filing. It is completely his call of whether termination of business is something that he is prepared for.

Process

Once the decision of which chapter to file under is made, debtor has to get the petition from the clerk of bankruptcy court. Either the chapter 7 or chapter 11 petitions has to be obtained based on his decision. The bankruptcy petition has to be completed based on guidelines provided by court clerk in consultation with his bankruptcy attorney. The information provided must be accurate and there must not be any mistakes on the form lest his case is dismissed. The matrix of creditors has to be duly filled in. This is a master list of all individuals and businesses to which franchiser owes money. The names, addresses, account numbers and balance due to each must be clearly mentioned in the matrix of creditors.

Individual franchises that are part of debtor’s franchise have to be mentioned in the matrix of creditors. Even though these are part of debtor’s business operations, debtor is in a relative position and owes these entities products and services that he might not be able to deliver due to the franchise bankruptcy. The franchise entities would have claims against franchiser business filing for bankruptcy. The bankruptcy petition, matrix of creditors and supporting documentation has to be submitted in court to clerk for initiation of bankruptcy proceedings.

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