When companies are owned by the public through shares of stock, the company is known as a publicly held company. The individuals who own shares in the company are known as shareholders and these individuals are partial owners of the company. Increasingly, shareholders are demanding a say in their companies' bankruptcy choices.

A recent piece published by the Wall Street Journal discusses this phenomenon, which is occurring primarily with shareholders of energy, coal, and other commodities-based companies. In many cases, companies that file for Chapter 11 bankruptcy are sold at prices that cannot cover their debts, leaving shareholders with nothing. In the cases discussed in the piece, shareholders are standing up for their rights to at least have some say in their companies' negotiations, stating that these companies are often worth more than they are sold for and that if they were sold for fair prices, the shareholders could potentially recover some of their money. They also state that they should be able to have their interests represented in cases where there is a problem to blame for the company's failure, such as mismanagement.

What Happens if Shareholders are Given a Say in Bankruptcy Proceedings?

When you are unable to handle your debt load, whether that debt load is personal or business debt, you might consider filing for bankruptcy. Bankruptcy is a legal process through which an individual or company in debt can have that debt discharged, either through the liquidation of assets (Chapter 7), a repayment plan (Chapter 13), or a reorganization of the company (Chapter 11). Other chapters exist as well, such as Chapter 9, Chapter 12, and Chapter 15, but these are for niche purposes and only utilized by specific groups.

Although bankruptcy is an option for regaining control of your debt, it might not be your only option. Even if it is one of many options available to you, it might not be your best option.

You Have Debts You Cannot Discharge

Chapter 13 bankruptcy is an option for individuals who have an income to work through their debt issues and move toward a financially sustainable future. Unlike Chapter 7 bankruptcy, which involves ceding control of the filing party's assets to a court-appointed trustee to liquidate and use the profits to pay off his or her debt, Chapter 13 pairs the filer with a trustee to develop a repayment plan that will allow him or her to repay the bulk of his or her debt over a period of three to five years. This type of bankruptcy puts more responsibility on the bankrupt party, but also allows him or her to retain his or her assets.

When determining any bankruptcy plan, the filing party's assets and income level must be determined. The court needs to determine that you can repay your debt obligations with your income before it approves of your Chapter 13 plan. If you make an irregular income, proving this can be difficult. However, it is not impossible. If you are a real estate agent, a freelance writer, a server in a restaurant, a salesperson working on commission, or in any other position that does not provide a consistent salary each month, speak with an experienced bankruptcy lawyer about how you can handle the Chapter 13 process.

In an earlier post, we discussed fashion retailer Aeropostale's financial troubles, the changing factors in the fashion world behind them, and the company's bankruptcy plan. Now, there are new developments regarding Aeropostale's bankruptcy and potential financial recovery. It and Versa Capital Management hope to reach a purchase deal by the second week of August.

In early August, Aeropostale won court approval to pay expenses to Versa Capital Management to cover the costs of Versa's stalking horse bid. Versa hopes to make a binding offer on Aeropostale's assets at auction. The management group has experience working with bankrupt retailers. One of its previous success stories is its reorganization of Eastern Mountain Sports in 2015. If it does obtain Aeropostale's assets, the management group hopes to keep at least 500 Aeropostale stores open in the United States, keeping thousands of individuals in those stores employed. The case is currently pending in the United States Bankruptcy Court for the Southern District of New York in Manhattan. Reorganization of a bankrupt company can be complex and involve multiple disputes from the parties involved. If you are considering filing for bankruptcy as a business owner, be sure to arm yourself with the aid of an experienced bankruptcy lawyer before you begin the process.

What is a Stalking Horse Bid?

Bankruptcy can be confusing. When you are trying to work through the stress and confusion of the bankruptcy process while balancing your job and family commitments, you can easily become overwhelmed and prone to making mistakes. These mistakes can only hurt you more, potentially invalidating your bankruptcy claim or forcing you to take extra time and money to repair them.

The best way to avoid making these mistakes is to familiarize yourself with them. Below are a few mistakes that individuals working through the Chapter 7 or Chapter 13 bankruptcy process can make.
Not Providing the Trustee with Your Required Documents