In March, Atlantic City’s Revel casino had to file for Chapter 11 bankruptcy protection, according to NJ.com. With the Atlantic City economy facing tough times, it had been hoped that the $2.4 billion casino would be a catalyst for turning around the town’s fortunes. Instead, less than a year after it opened and after consistently remaining one Atlantic City’s least profitable casinos, Revel fell victim to the same issues plaguing the city it was meant to save.
After January 2013 saw Revel post its second-worst month, winning less than $8 million from gamblers, the casino agreed to a prepackaged bankruptcy that wiped away two-thirds of its $1.5 billion in debt by converting over $1 billion of it into equity for lenders. The bankruptcy allowed Revel to stay open with its existing management in place, and it can still pay its vendors and 2,000 employees.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a form of bankruptcy available to all types of businesses, including sole proprietorships, corporations and partnerships, which allows the business to stay open and overcome its financial difficulties at the same time by restructuring its debt. While filing under Chapter 11 can be more complicated than other forms of bankruptcy, it has several benefits, such as:
- An automatic stay, which halts all litigation against the business, including collection activity and lawsuits
- The business owner or owners retain control of the business as the “debtor in possession”
- The business can avoid liquidating all of its nonexempt assets and distributing the proceeds among its creditors by instead entering into a repayment agreement with its creditors
- The business can reject and cancel contracts to increase its financial security and profitability
- The business can acquire financing and loans on better terms by giving top priority on earnings to its new lenders
Can an Individual File for Bankruptcy Under Chapter 11?
Generally, individuals file for bankruptcy under Chapter 7 or Chapter 13, which are simpler and less expensive than Chapter 11 bankruptcy. However, for individuals with large liabilities or who are engaged in complex business transactions, filing for bankruptcy under Chapter 11 may be their best and possibly only option.
Not everyone is eligible to file Chapter 7 or Chapter 13 bankruptcy. According to the United States Courts website, Chapter 7 eligibility depends upon the amount of the debtor’s debts and whether the debtor can pay all just debts or not. Chapter 13 eligibility is only granted “as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400.”
Bankruptcy Attorneys In or Around Morris County
If you are considering Chapter 11 bankruptcy for either yourself or your business, speaking with qualified legal counsel is a necessity. Chapter 11 cases can be complex and costly and require legal representation that is experienced, knowledgeable, skilled and has your best interests at heart.
For more information about Chapter 11 bankruptcy and whether it is right for you or your business, call us at (973) 984-1300, and schedule a free consultation with one of our Morris County bankruptcy lawyers today.