If you’re considering business bankruptcy, then you have a variety of options, and the path you choose will depend on the specifics of your business. If personal liability is an issue, then Chapter 7 bankruptcy may be the appropriate route. With Chapter 7, an automatic stay is placed on creditor actions, including foreclosure, repossession and garnishment.
Businesses and high net worth individuals who have a combination of heavy debt and significant assets may benefit from Chapter 11 bankruptcy, whereby assets can be reorganized or sold to address the debt. For example, consider the ongoing Chapter 11 case involving the Hollywood sound production company Todd-Soundelux LLC.
You may have heard Todd-Soundelux’s sound work in a number of popular movies and television shows, including “Game of Thrones,” “Mad Men” and “Lone Survivor.” The company saw a drop in feature film revenue, however, and filed for Chapter 11 bankruptcy back in May. Todd-Soundelux has since closed its doors and plans to sell off its assets, including its website and library of sound effects.
A court has already approved an initial bid from a Canadian company, Sound Ideas. An auction to sell Todd-Soundelux’s sound library has been scheduled for Nov. 13, and the company also plans to sell its sound studio in Burbank, along with equipment and furniture. A bankruptcy judge in Los Angeles will be asked to approve the highest bid after the auction.
The life of a business can have many ups and downs, and sometimes selling the assets and stepping away is the right choice. In one of our recent posts, we discussed how to prepare a business for sale.
An article in The Wall Street Journal has more on the upcoming Todd-Soundelux bankruptcy auction.