1512 Artaius Parkway, Suite 300,
Libertyville, IL 60048

Call for a FREE Phone Consultation

847-549-0000

Video Consultations Also Available

Scout Media Files for Chapter 11 Bankruptcy

Posted on in Chapter 11

Scout Media Files for Chapter 11 Bankruptcy

Digital sports network Scout Media Inc. has filed for Chapter 11 bankruptcy, the process through which a business can restructure it operation to cut down on expenses and ultimately become profitable again after reaching an overwhelming level of debt. For Scout Media, this came after three of its creditors pushed the company into bankruptcy through an involuntary Chapter 11 petition, claiming that it owed them a total of approximately $800,000.

When a large company accrues debt, many different parties are affected. Not only do the company's leaders suffer financially, its employees as well as its creditors can suffer because of the money tied up in the company. Chapter 11 bankruptcy generally involves the sale of a company and its assets, often to a holding company that then revamps it in an attempt to help the company recover financially.

How Does an Involuntary Chapter 11 Petition Work?

Scout Media Inc. faced an involuntary Chapter 11 petition. This means that its creditors attempted to force it into bankruptcy in an effort to recover their investments.

When a company does not pay its debts as they become due, its creditors have the right to file an involuntary bankruptcy petition to attempt to force the company into bankruptcy and into paying its debts. Multiple creditors can be involved in an involuntary bankruptcy proceeding. In fact, for companies with 12 or more creditors, at least three must be involved in an involuntary bankruptcy petition and have a total of $15,775 or more in unsecured debt for the petition to be successful.

When an involuntary bankruptcy petition is filed, the company in debt has 20 days to respond to the petition. If the company does not respond, the bankruptcy process begins. If it does respond to the petition, the court sets up a hearing at which both parties explain their sides of the situation. If the court finds that the bankruptcy petition was filed in good faith, the bankruptcy process begins. If the court finds that the petition was not filed in good faith and the company has been paying its debts as required, it may dismiss the case and require the creditors to cover the indebted company's court expenses.

Only certain types of companies can face involuntary bankruptcy. Farmers, insurance companies, and non-profit organizations are among the types of companies that cannot be forced into bankruptcy through an involuntary bankruptcy petition. Further, although it is possible for an individual to face an involuntary bankruptcy action, it is extremely rare.

Work with an Experienced Buffalo Grove Bankruptcy Lawyer

If you are considering filing for bankruptcy, work with an experienced lawyer who can guide you through the process to help you reach your goal, whether that goal is to reduce your personal debt or to restructure your small business to allow it to become profitable again. To get started with a member of our team of experienced bankruptcy lawyers at Newland & Newland, LLP, contact our office to schedule your initial legal consultation. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Fabian Blank)

Top 100 AFDA BBB IRELA Illinois State Bar Association Illinois Trial Lawyers Asscociation Manta Member NACBA North western suburban bar association Top One
Back to Top