Large corporations often use bankruptcy protection when restructuring or when faced with significant drops in the economy. On Thursday, well-known Dallas based corporation Reddy Ice filed for Chapter 11 bankruptcy protection with the support of its lenders and creditors. The filing will not affect the day to day business of Reddy Ice, the largest packaged ice producers in the country.
Reddy Ice will use the Chapter 11 filing as an opportunity to recover from a $33.3 million loss this quarter and to shoulder an increase in production costs. The Chapter 11 claim will also secure the company’s footing in negotiations in a buy-out of one of its top competitors. A press release cites three significant factors in the decision to file the Chapter 11 in the United States Bankruptcy Court for the Northern District of Texas. The company faces heavy debts, higher commodity costs, and a weak economy.
The Chapter 11 filing is a “Voluntary Plan of Reorganization.” These types of claims allow businesses to receive the automatic stay, which gives businesses the time and protection they may need to restructure when faced with uncertain economic factors, including those outside of the company’s control. Basically, the Chapter 11 claim includes a list of all debts, incomes, expenses, assets, and liabilities, in addition to a statement of reorganization. However, the details of the claim and how it can be filed will be determined based on the type of business filing the Chapter 11 claim with the bankruptcy court. In cases where corporations file for Chapter 11 bankruptcy, the personal property and assets of shareholders is protected, but businesses with sole proprietors may include these items.
Individuals can also make a Chapter 11 bankruptcy claim and receive the automatic stay. If you are considering a restructuring of your personal finances or your business debts, you may be eligible for bankruptcy protection under this claim in Arizona. Consult with one of our Tucson bankruptcy lawyers to help you navigate bankruptcy claims court.