In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides expert insights on the bankruptcy process and options for debtors.
Summary
The West Virginia High Technology Consortium Foundation, along with HT Foundation Holdings Inc., has filed for Chapter 11 bankruptcy reorganization following a $20 million breach-of-contract lawsuit by Huntington National Bank. The bankruptcy filing halts the lawsuit proceedings and any foreclosure sale. Adam Stein-Sapir, a co-managing partner at Pioneer Funding Group LLC, explains that Chapter 11 provides debtors with protections such as an automatic stay, which prevents creditors from taking action against the debtor during the bankruptcy. Debtors have up to 18 months to file a reorganization plan, and creditors have the option to propose alternative plans or push for property sales to settle debts.
- The High Technology Consortium Foundation lists its assets and liabilities between $10 million and $50 million.
- The bankruptcy filing includes emergency motions to pay employees and use cash collateral and pre-petition bank accounts.
- The bank’s lawsuit seeks repayment for a $24 million promissory note, with the foundation’s president expressing surprise and disappointment at the bank’s actions.
Q&A
What is Chapter 11 bankruptcy?
Chapter 11 bankruptcy is a legal process that allows businesses to reorganize their debts while continuing to operate. It provides protections such as an automatic stay, which stops creditors from collecting debts during the bankruptcy proceedings. Debtors have a certain period, typically up to 18 months, to propose a reorganization plan. For more information on bankruptcy, visit Pioneer Funding LLC.
How does filing for bankruptcy affect a lawsuit against the debtor?
When a debtor files for bankruptcy, an automatic stay is put in place, which postpones any ongoing lawsuits, including foreclosure sales. This gives the debtor time to reorganize their finances and propose a plan to settle their debts. Creditors can request the court to allow them to propose alternative reorganization plans or to push for asset sales to pay off debts.
What options do creditors have when a debtor files for Chapter 11 bankruptcy?
Creditors can request the bankruptcy judge to terminate the debtor’s exclusivity, allowing them to file their own reorganization plans. They can also press for a sale of the debtor’s properties, with the proceeds going towards paying off creditors based on priority. For more details on the implications for creditors when a customer files for bankruptcy, you can refer to this guide.
