Los Angeles Bankruptcy Law Blog

Bankruptcy is often used to give an individual a fresh start, but sometimes it can even give a major league baseball team, like the Los Angeles Dodgers, a fresh start. Although corporate bankruptcy under Chapter 11 is more complex than the more commonly used Chapter 7 and Chapter 13 bankruptcies, it offers the same result: a chance to get back on the right track.

Despite six World Series championship wins, in recent years the Dodgers have been in the news mostly for their financial difficulties. Trouble began in 2009, when then-owner Frank McCourt began a long and acrimonious divorce from his wife. His wife demanded to be reinstated as the Dodger's chief executive officer, beginning a long battle over what would become of the team. The litigation took its toll on the team and their fans, who wondered if the Dodgers would ever just be able to just focus on baseball again.

Chapter 11 bankruptcy is most commonly advised for businesses or corporations and comprises around just 1 percent of bankruptcy filings. However, it appears that for a business to file under Chapter 11 is no longer practical because it may be outdated. The Bankruptcy Code was crafted 34 years ago and has remained largely unmodified.

In our modern world, particularly in light of the recent economic downturn, business owners are calling for an overhaul of the Code as a vehicle to save more jobs and make filing for bankruptcy under Chapter 11 more conducive to the continued health of the business or corporation.

One man filed for bankruptcy and obtained a debtor's discharge, which is a legal injunction intended to eliminate collection actions from creditors. Bank of America has been ordered to pay the damages resulting from their continued harassment of this individual that filed for bankruptcy. The creditor harassment continued, resulting in the individual being called 38 times to inquire after outstanding payments after he filed for bankruptcy.

In California, when an individual files for bankruptcy, an automatic stay is put into place. This means that a halt is placed on foreclosures, wage garnishment, evictions and creditor harassment. Creditor harassment is not only unwelcome, it can be illegal.

The owner of an oil company filed for Chapter 13 bankruptcy protection when he found himself in the predicament of owing customers several thousands of dollars worth of oil, already paid for by customers, that the owner could not deliver. In addition, the owner reportedly possessed up to $1 million in liabilities to over 60 creditors.

It appears that in an attempt to make right by his customers, the owner was hand delivering small batches of oil to prepaid customers. However, this effort was not enough to cover the tens of thousands of dollars for undeliverable oil, and the owner filed for Chapter 13 protection on Mar. 12.