Category Archives: Bankruptcy

In its heyday, Le Chateau had nine stores along a roughly three-kilometre stretch of Ste-Catherine Street in Montreal.

The Canadian retailer was a staple of nearly every mall and shopping district in the country, with 240 locations at its peak.

"The more sales we made, the more stores we opened and the more stores we opened, the more sales we made," says Franco Rocchi, a Le Chateau executive that started with the clothing brand four decades ago as a sales clerk at one of the Ste-Catherine Street locations.

"That was the retail formula back then and it worked. It was all about brick and mortar -- not only for Le Chateau but for Aldo, Gap and others throughout the 70s, 80s and 90s. We were in every primary market, secondary market and tertiary market."

Le Chateau defined edgy clubwear, formal dresses and fashionable office attire for decades in Canada, but started facing increasing competition from foreign retailers like H&M and Zara in the early 2000s.

By 2014, Le Chateau was losing money. But the company had a plan: Close 100 stores over five years, with a return to profitability in 2020.

"We did it the honourable way," Rocchi says. "We had leases, we had handshakes, we had good relationships with our landlords. We thought we could navigate the five-year plan."

But the exit strategy the retailer spent half a decade working toward hit a major snag.

"The plan included a turnaround, a return to profitability," Rocchi says. "But the irony was that magic year we worked towards for five years was 2020."

Pandemic shutdowns not only shuttered the retailer's stores throughout 2020. Proms, weddings, galas and parties -- key drivers of the retailer's dress sales -- were outright cancelled.

Le Chateau filed for creditor protection in October 2020, joining the ranks of dozens of big-name retailers that buckled under the weight of COVID-19 restrictions.

In June, Suzy's Inc. -- the company behind women's clothing brand Suzy Shier -- stepped in to buy Le Chateau's intellectual property and now it's making a comeback with the online launch of an evening wear collection ahead of the holidays.

The so-called glamour capsule unveiled Tuesday offers shoppers a hint of what to expect with the brand's official relaunch under its new owner set for spring.

Rocchi -- now senior marketing director of Suzy/Le Chateau -- says the curated, limited-edition collection highlights the brand's focus on high-fashion occasion wear.

"Even as we were going through the challenge of closing stores, we actually started to see significant success in our dress business," he says. "We were seeing year-over-year growth in our occasion business. We found our sweet spot, which was beautiful dresses at a great price point."

The full collection planned for 2022 will include footwear, accessories and menswear, with women's dress wear available in select Suzy Shier stores across the country.

"We will have stores within stores at about 35 Suzy locations across the country," Rocchi explains. "It won't just be Le Chateau products pushed into Suzy stores. It will be a clearly demarcated beautiful shop, so customers will know it's Le Chateau."

He adds that there will be no "cannibalization" between the brands, as Suzy Shier is focused on casual, weekend and work wear.

"We like to say our customers can wear Suzy by day and Le Chateau by night," Rocchi says.

Indeed, the Suzy Shier website appears divided in half, with a model wearing a sweater and items like warm hats and gloves on one side, while a model is dressed in an evening gown on the other side along with items like sparkly "party tops."

This report by The Canadian Press was first published Nov. 16, 2021

Original post:

Le Chateau's return from bankruptcy includes online sales, stores within stores - AM800 (iHeartRadio)

After 28 years on the bench, U.S. Bankruptcy Court Judge Jerry Funk began quasi-retirement Nov. 2, the first day of a three-year term of reserve status.

That status is how Funk, 76, will stay in touch with his colleagues and help his successor and another new bankruptcy judge transition to the U.S. Middle District of Florida bench.

I dont play golf. Im not a fisherman. I read and I jog every day, Funk said.

Its having a place to go for a few hours, but Ill let the new guys handle the Chapter 11s because they can go on a long time.

Appointed to the bench in 1993, Funk has presided over many high-profile cases, including the Chapter 11 reorganization of Winn-Dixie Stores Inc. and the personal bankruptcy of former Jacksonville Jaguars quarterback Mark Brunell.

He presided over the liquidation of Taylor, Bean & Whitaker, an Ocala-based wholesale mortgage lender. The case is significant because TB&W was the fifth-largest issuer ofGovernment National Mortgage Association securities when the government shut it down in 2009 and charged it with bank fraud.

The last case of Funks full-time career in the bankruptcy court was the liquidation of Jacksonville-based Stein Mart Inc.

Jacksonville Bankruptcy Bar Association President Allan Wulbern, left, presented a box of cigars to retired U.S. Bankruptcy Court Judge Jerry Funk.

A reluctant law student

Funk grew up in North Georgia. He was firmly guided toward college by his father, a Polish immigrant who worked in textile mills, where Funk worked each summer starting before he was a teenager.

Dad gave me the dirtiest, hardest-working jobs. He didnt want me to be in the carpet business, Funk said.

After graduating from the University of Georgia in 1967 with a degree in business administration, Funk said he faced the choice of continuing his education or possibly being drafted and sent to the Vietnam War.

I never wanted to be a lawyer, but I took some business law courses at Georgia. I said well, let me go to law school.

After enrolling at Cumberland School of Law at Samford University in Birmingham, Alabama, Funk joined the U.S. Army Reserve and missed a semester while in basic training.

He returned and received his J.D. in 1970.

When I got out of law school, I said Id take the Bar exam one time. I took a review course and they said I had a 70% chance of passing it, Funk said.

With law school behind him, Funk and his wife, Maxine Witten Funk, planned to move to South Florida, but that plan changed.

Maxines parents lived in Jacksonville, so the Funks rented a house from them and Funk started looking for employment after taking the Bar exam in Miami.

Senior U.S. Circuit Judge, 11th Circuit Court of Appeals Gerald B. Tjoflat, left, and retired U.S. Bankruptcy Court Judge Jerry Funk. Tjoflat administered the oath of office to Funk on Nov. 3, 1993.

I went to insurance companies trying to get a job because I didnt think I passed the exam. They wouldnt hire me. They said that with a law degree, I was overqualified, Funk said.

He learned from a cousin who practiced law that a small local firm, Coleman Madsen, might be looking to hire someone to draft motions, write letters and do research.

Funk said he went to meet the partners without a resume or transcript, still under the impression there was no way he could have passed the Bar exam.

They interviewed me on a Friday and called later that day and told me to come to work on Monday. I lucked into a job.

One of the partners decided to call the Florida Board of Bar Examiners to inquire about the results of the new employees exam.

They told him I passed. I didnt believe him, so I called the board and confirmed it, Funk said.

Weeks later, Coleman decided to leave the firm. Madsen did a lot of work for the Church of Jesus Christ of Latter-day Saints, so he spent most of his time in Salt Lake City, where the church is based, Funk said.

All of a sudden, I was alone in the office. I didnt have any mentors and I was going up against experienced attorneys. I was getting beaten to death. I didnt know what I didnt know, but I started to enjoy practicing law.

Learning by doing

As an unintended solo practitioner, Funk found it difficult to build enough business to make a decent living in civil law, so he diversified his practice.

In the early 1970s, the Municipal Court paid private attorneys to represent indigent criminal defendants, he said.

I made $25 a case. I picked up two or three cases, sometimes four. It was mostly DUIs and Id get them off on probation, Funk said.

He later went into partnership with attorney Mark Green and for nearly 20 years practiced personal injury, family and real estate law at Funk & Green.

He also started doing some pro se misdemeanor work in federal court and some simple filings in bankruptcy court.

U.S. Bankruptcy Court Judge Jacob Brown succeeded retired U.S. Bankruptcy Court Judge Jerry Funk. Brown presented a University of Georgia football helmet to Funk, a UGA undergraduate alumnus.

His limited bankruptcy practice led to becoming a Chapter 13 trustee.

When I went on the bench, I had all the experience in the world. It probably made me a better judge, Funk said.

Funk applied to become a bankruptcy judge in 1992 and was appointed a year later.

The job paid two-thirds of what I made as a lawyer. It was tough, but it turned out to be the best job Ive ever had, Funk said.

A sense of humor

As a former somewhat reluctant law student and mostly self-mentored attorney, Funk transitioned that background to the bench.

I take my job seriously, but I dont take myself seriously. You have to maintain a sense of humor, he said.

That was evident the day Funk began presiding over Winn-Dixies bankruptcy in 2005.

At the first hearing, I had all these New York lawyers come in. They talked 100 miles an hour. I said, Wait a minute. Youre not in New York, youre down in the South. We talk a lot slower. We hear a lot slower. You guys need to calm down, Funk said.

At the next hearing, none of those guys were there. They had local counsel appear.

Funks judicial demeanor and his sense of humor are appreciated by the attorneys who practice in his court.

Judge Funk treats people with respect, kindness and oftentimes humor. It makes appearing before him a pleasure. He disarms everyone with his modesty and humility and then wows you with his sneaky Southern intellect. Its a real gift, said Allan Wulbern, president of the Jacksonville Bankruptcy Bar Association.

Cases involving multimillion-dollar business issues can be heard on the same day that an individual is trying to save his or her home from foreclosure and obtain a fresh start, Wulbern said.

It takes a special person to be a bankruptcy judge and the best ones never lose sight of how impactful their decisions can be.

Funk said his philosophy is to treat everyone the same, whether the case is a complex commercial liquidation or consumers who got into too much credit card debt and are representing themselves in court.

I sit and listen and let them get it off their chest. A lot of people just want their day in court.

Whats next

Funk is succeeded by Jacksonville bankruptcy lawyer Jacob Jay Brown, who was sworn in Nov. 3.

Another bankruptcy judge also will be appointed in Jacksonville to succeed Judge Cynthia Jackson, who retired from the court in August.

Funk said he was contemplating retirement when his wife of 45 years died in October 2011 after a short illness. He decided to remain on the bench to focus on work, but that was 10 years ago.

Im ready now. Enough is enough, Funk said.

Read the original post:

Jerry Funk: 28 years on the bankruptcy bench - Jacksonville Daily Record

When Byton unveiled the M-Byte electric SUV in 2018, it seemed like a very credible EV that looked close to production and we were expecting to see it make its market debut in 2019, with full-scale production planned for 2022. That has not happened according to plan and in the meantime rivals (like XPeng or Nio) that didnt seem as advanced at the time have launched similar models, and now Byton looks set to go under.

We last reported on Byton back in mid-2020 when the company suspended its activity and it was idling its factory, and we attributed that to the pandemic. However, the company doesnt seem to have recovered in months since and now, according to Nikkei Asia, its main business unit, Nanjing Zhixing New Energy Vehicle Technology Development, is being forced in court by a creditor to begin the bankruptcy procedure.

The source points out that Bytons troubles began in September of 2019 when several factors negatively affected the company: one round of funding led by FAW failed, there was a management change and then the pandemic hit. An unnamed source within the company familiar with the situation also said back then that

It will probably be very difficult for Byton to revive

Now, two years later, things are still not looking up for the company that in 2020 had some 1,000 employees in China and around 500 more in other countries, mainly the United States. Its main backer was Chinas FAW Group, which has since shifted its focus to its own HongQi (Red Flag) brand, and early investors included Tencent Holdings, as well as the Foxconn Technology Group.

In September of 2020, Byton was looking to raise close to $300-million from FAW, but that didnt materialize and a few months later Foxconn stopped its investment and then another backer, the investment arm of the Nianjing government also pulled its funding, making Bytons recovery appear highly unlikely.

Read more:

Byton Close To Bankruptcy With Missed Payments, Production Halted - InsideEVs

Theres no guarantee that any company wont end up in Chapter 11 or wont acquire another company going through it. When either happens, there are serious implications for the compliance team.

As Kasey Ingram, General Counsel & Chief Compliance Officer at ISK Americas and Rocco Debitetto, Partner at Hahn Loesser & Parks explain in this podcast, while the importance of compliance doesnt change during a bankruptcy, the environment in which it operates transforms Seemore+

As Kasey Ingram, General Counsel & Chief Compliance Officer at ISK Americas and Rocco Debitetto, Partner at Hahn Loesser & Parks explain in this podcast, while the importance of compliance doesnt change during a bankruptcy, the environment in which it operates transforms dramatically.

Chapter 11 is designed to help the company breathe, reorganize, redeploy its assets and hopefully continue to operate. But while for rank and file employees it is likely business as usual (with a good amount of stress added) for management its a frantic time. More, who and where compliance reports may be very different.

The debtor in possessions appoints officers and managers to run the company, and these individuals may be different than the people the compliance team had reported to. They also are focused on, as quickly as possible, saving the company and getting it back on its feet. Compliance is not a priority.

As a result, its important for compliance to do two things quickly. First, make sure the new management knows who the compliance team is and what it does. Second, let them know that you are not there to get in the way but to help avoid potential problems that will add greater complexity to the reorganization efforts.

On a tactical level theres a need to ensure that leadership, when reviewing contracts, knows which ones are essential to running the compliance programs. Canceling the helpline contract, for example, may save money but should not be on the table.

Compliance also needs to be on the lookout for empty chairs. Chapter 11 is typically a time when there is substantial turnover. Keep a vigilant eye out for departures by people who have compliance responsibilities, and be prepared to backfill the positions.

What happens if your company is healthy and acquiring a company out of Chapter 11? Expect insufficient time to do the standard due diligence.

The good news is that the US Department of Justice generally understands that post-acquisition due diligence may be necessary, but dont wait too long to do it. Then if you find issues, be sure they are addressed promptly.

In sum, even if bankruptcy seems far away, its worth taking the time to listen to this podcast. Even seemingly healthy companies can take a sudden downturn, or acquire another entity that is in Chapter 11. Seeless-

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Ingram and Debitetto on Bankruptcy and Compliance Programs | Health Care Compliance Association (HCCA) - JDSupra - JD Supra

The U.S. Court of Appeals for the Sixth Circuit recently ruled in a case involving a Chapter 13 debtors attempt to shield contributions to a 401(k) retirement account from projected disposable income, therefore making such amounts inaccessible to the debtors creditors.[1] For the reasons explained below, the Sixth Circuit rejected the debtors arguments.

Case Background

This appeal involves the Chapter 13 bankruptcy filing of a husband and wife (the Debtors). The issue on appeal was whether the Debtors could exclude future 401(k) contributions from their disposable income and creditors. The Husband/Debtors work and prior 401(k) contribution history weighed heavily in the Sixth Circuits analysis.

As part of their petition, the Debtors sought to exclude $1,375.01 per month from their disposable income as voluntary contributions to Husband/Debtors 401(k) plan. The Chapter 13 Trustee objected to the exclusion and the bankruptcy court ruled in favor of the Trustees argument. The Debtors appealed to the District Court, which affirmed the bankruptcy courts ruling, and then Debtors appealed to the Sixth Circuit.

Analysis

As a general principle, a Chapter 13 bankruptcy debtor may obtain some relief from his/her debts while retaining his/her property. However, in order to receive such protection, a debtor must agree to and abide by a court-approved plan under which he/she pays creditors out of future income. In general, a debtor must commit all projected disposable income to the payment of creditors for a fixed period of time.

The Sixth Circuit explained that while the Bankruptcy Code does not define projected disposable income, it does define disposable income as a debtors current monthly income . . . less amount reasonably necessary to be expended . . . for the maintenance or support of the debtor. 11 U.S.C. 1325 (6)(2).

Current monthly income is defined as the average monthly income from all sources (other than those specifically excluded) that the debtor [has] receive[d] in the six months preceding filing for bankruptcy. 11 U.S.C. 101(10A).

This case, therefore, boiled down to whether the post-petition amounts the Debtors intended to contribute to a 401(k) plan constitute projected disposable income. The Sixth Circuit ruled that such amounts should be treated as projected disposable incomes that are available to pay creditors.

In its analysis, the Sixth Circuit noted that, prior to the 2005 amendments to the Bankruptcy Code, there was consensus among the bankruptcy courts that wages voluntarily withheld as 401(k) contributions formed part of a debtors disposable income. Therefore, such amounts were routinely available to unsecured creditors as part of a Chapter 13 plan.

After 2005, following the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), bankruptcy courts began adopting different approaches for the treatment of 401(k) contributions as disposable income.

The splintering of opinionswith four competing approaches adopted by different courtsresulted from what is known as the hanging paragraph in Section 541(b)(7)(A) of the Bankruptcy Code, which defines what property should not be included as property of the estate in a bankruptcy case. While Section 541(b)(7)(A) provides that amounts withheld by an employer for contribution to an employees 401(k) plan are to be excluded from property of the estate, the hanging paragraph at the end of the section states except that such amount under this subparagraph shall not constitute disposable income as defined in section 1325(b)(2).

In analyzing this case, the Sixth Circuit revisited its ruling in Davis v. Helbling (In re Davis), which also involved a debtor who sought to exclude future 401(k) contributions from disposable income. The key difference from this case, however, is that in Davis the debtor had been steadily making 401(k) contributions for at least six months prior to bankruptcy.

Accordingly, in Davis, the Sixth Circuit concluded that the hanging paragraph is best read to exclude from disposable income a debtors post-petition monthly 401(k) contributions so long as those contributions were regularly withheld from the debtors wages prior to her bankruptcy.

In this case, the Debtors did not make 401(k) contributions during the six months prior to bankruptcy. The Debtors argued that this shouldnt matter, and grounded their arguments in equity. They urged the Sixth Circuit to consider the totality of circumstances and assess the husbands good faith. They argued that the husbands consistency in contributing to his 401(k) account in the years preceding the six-month lookback period should be relevant, and that Davis interpretation of the hanging paragraph would be inequitable on these facts.

The Sixth Circuit rejected all of these arguments. It held that the bankruptcy codes text does not permit a Chapter 13 debtor to use a history of retirement contributions from years earlier as a basis for shielding voluntary post-petition contributions from unsecured creditors.

View original post here:

Sixth Circuit Affirms Holding that Contributions to a 401(k) Plan Made More than Six Months Prior to Bankruptcy Cannot be Excluded from Disposable...

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The rest is here:

Bankruptcy Alert for New England States, NY, RI, and DE - The National Law Review

Nearly two months ago, a U.S. bankruptcy court judge approved a controversial Purdue Pharma plan that would funnel billions of dollars to pay for the harm caused by the OxyContin opioid painkiller.

At the core, the deal calls for some members of the Sackler family which controlled Purdue to contribute more than $4.3 billion over nearly a decade to compensate individuals, state and local governments, and tribal communities for the cost of the opioid crisis. The deal was in response to some 3,000 lawsuits that prompted the company to seek bankruptcy in 2019. But even though the plan was approved, the money hasnt started flowing and it remains unclear when that will happen.

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STAT+ is STAT's premium subscription service for in-depth biotech, pharma, policy, and life science coverage and analysis.Our award-winning team covers news on Wall Street, policy developments in Washington, early science breakthroughs and clinical trial results, and health care disruption in Silicon Valley and beyond.

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The Purdue bankruptcy plan was approved. Where is the money? - STAT

By Steven Church and John Gittelsohn | Bloomberg

The developer of one of the biggest homes ever built in the U.S. featuring a moat and 30-car garage filed for bankruptcy to keep lenders from foreclosing on the Los Angeles property.

Dubbed The One, the mansion was being developed by Crestlloyd LLC when a fight broke out with lenders, including Hankey Capital. The lenders went to court in Los Angeles claiming they werent being paid, according to court papers. Eventually, a receiver was appointed to handle the project.

Crestlloyd believes that the receiver has hampered efforts to complete the property, as well as to market, show, and sell the property in its current state, the company said in bankruptcy court papers.

Related: Worlds priciest home: O.C. designer creates a plan for $500 million L.A. giga-mansion

Ted Lanes, the court-appointed receiver, declined to comment Wednesday.

Im disappointed, Don Hankey, whose specialty is subprime auto financing, said about the bankruptcy filing. All we want is to get our capital returned.

Hankey, who loaned more than $82.5 million for the project, had a foreclosure sale of the property set for Wednesday.

The developer of one of the biggest homes ever built in the U.S. featuring a moat and 30-car garage filed for bankruptcy to keep lenders from foreclosing on the Los Angeles property.(Handout rendering)

The developer of one of the biggest homes ever built in the U.S. featuring a moat and 30-car garage filed for bankruptcy to keep lenders from foreclosing on the Los Angeles property. (ED CRISOSTOMO, ORANGE COUNTY REGISTER)

An artists rendering shows fountains that surround the upper floors of The One.

An artists rendering shows the rear of The One, a 104,000-square-foot Bel Air compound designed by Paul McClean of Orange. The home is angled to oversee west Los Angeles and downtown L.A. off in the distance.

An artists rendering shows lounge tables and booths that appear to float in an outdoor pool at the base of a two-story-high waterfall. Just inside from the floating lounge is the homes discotheque. In addition to a 74,000-square-foot main house, the compound has a guest house and staff quarters totaling another 8,150 square feet, city records show.

An aerial photo shows construction under way at the 104,000-square-foot compound, on a 4-acre lot thats about 2 1/3 football fields long. Developer Nile Niami broke ground in 2014 and is expected to complete construction in late 2017. He says he is asking $500 million for the compound when its finished. Although some West Los Angeles brokers are skeptical, they say its still possible its sale price will surpass the world record of $301 million.

Property developers sometimes use bankruptcy as a way to block lenders from foreclosing. Under Chapter 11 rules, lawsuits, including state foreclosure actions, are halted to give a company the chance to reorganize and clear its debts.

The One is worth about $325 million, but only has $176 million worth of secured loans attached to the property, Crestlloyd claimed in court papers. Even if the property sells for half its original $500 million price, theres still plenty of value to pay all the debts, Crestlloyd said.

Lanes planned to list the home for $225 million. The 105,000-square-foot (9,750-square-meter) main house almost twice the size of the White House features four swimming pools, a two-story waterfall, a nightclub, movie theater, four-lane bowling alley, beauty salon, spa, gym and cigar lounge.

The case is Crestlloyd LLC, 21-bk-18205, U.S. Bankruptcy Court, Central District of California (Los Angeles).

See the original post:

$500 million Los Angeles mega mansion The One now in bankruptcy - The Mercury News

I remember the story of a poor, old beggar who died one day- and to everyones surprise, a money belt found wrapped around his waist contained thousands of dollars in cash. Apparently, he had found the money belt while digging through trash, decided to keep it but never really opened it. Thus, he lived the rest of his days without even knowing what he had. Had he known about what was available to him to alleviate some of his suffering, life could have been a little better.

The story of this poor, old beggar comes to my mind when I see how many people continue to suffer needlessly in debt when the law provides a remedy for them to change their financial situation for the better. By saying this, I realize that some people may accuse me of being biased in favor of bankruptcy because I make my living as a bankruptcy attorney. I urge you, however, to keep an open mind at least for a moment as you read this article. What I hope to accomplish here is to make you understand that the purpose of our laws is to help and not hurt people. So, stay with me here for a few minutes.

The legislative intent of Congress in passing our bankruptcy laws is to allow a fresh start to those honest individuals who have found it impossible to cope with debt problems. Because life is not perfect, Congress realized that a person who needs to recover financially after experiencing serious debt problems should at least be given a chance to do so. This concept of a fresh start is the foundation of our bankruptcy laws and has become an integral part of our economic system and our society.

Because money affects almost all areas of our lives, money problems can have an extremely devastating effect on the family, our most fundamental social structure. It is probably fair to say that it is the families of this country that ultimately benefit from the protection afforded by our bankruptcy laws. Can you imagine how many families suffering in debt could possibly be out in the streets right now if it werent for the fresh start that our bankruptcy laws provide? For parents with dependent children, the challenges presented by insurmountable debt problems are even bigger because ultimately, the childrens welfare may be at risk.

So, bear in mind if you are considering bankruptcy as a possible solution to your debt problems that the purpose of our bankruptcy laws is to make financial recovery attainable as soon as possible to those who need it. Of course, this does not mean that filing bankruptcy is always the solution to every financial problem. Your bankruptcy lawyer must carefully review your situation, weigh the pros and cons, and make appropriate recommendations. When filing, there must be a clear objective and the chances of success for the type of bankruptcy being filed must be assessed. Is it your objective to eliminate debts you can no longer afford to pay, or do you simply need to consolidate your debts to make them more manageable? Are important legal rights or your assets at stake? What can be done to protect them and at what expense? These are some of the questions that must be answered.

If you would like to explore bankruptcy as possible option in getting out of debt, please call TOLL FREE 1-866-477-7772 to schedule an appointment.

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NOTE: Due to virus safety concerns, I am offering free consultations BY PHONE OR VIDEO to anyone who needs help in dealing with their debt problems.

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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 5,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-477-7772.

(Advertising Supplement)

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[COLUMN] Bankruptcy can be the first step to financial recovery - Asian Journal News

African-Americans are as much as 28 percent more likely to be dismissed from bankruptcy proceedings than non-Black bankruptcy filers, contributing to the widening wealth gap existing in the U.S., experts are reporting.

A bankruptcy dismissal closes your bankruptcy case, which means loss of protection of the automatic stay (the order that prohibits creditors from collecting debts). The bankruptcy petitioner continues to be liable for his debts.

Stock photo (Pexels)

A recent study released by the University of Pennsylvanias Wharton School of Business reveals bias in bankruptcy dismissal rates. This study, along with a 2012 report, found that Black Americans were more likely to be advised to enter Chapter 13 versus Chapter 7 bankruptcy proceedings, revealing implicit bias existing in bankruptcy advice and proceedings.

Led by Wharton finance professor Sasha Indarte, researchers found that Black bankruptcy filers were more likely to have Chapter 7 and Chapter 13 bankruptcy cases dismissed by the court.

A bankruptcy dismissal occurs for a variety of reasons. If a judge believes there has been intentional misconduct on the part of a filer or if forms have not been submitted correctly to the court. But one of the most common reasons: failure to repay debts filed under Chapter 13.

When a case is dismissed, this means someone goes through all the hassle of trying to file for bankruptcy, but they dont actually get the debt relief by the end of the process, Indarte said during an interview with Wharton Business Daily on SiriusXM.

When we see that Black filers are much more likely to get their cases dismissed, that means theyre getting access to debt relief at a much lower rate.

The study found that Chapter 7 cases for Black filers were 4 percent more likely to be dismissed than non-Black filers. The average dismissal rate for bankruptcy is 2 percent. Chapter 13 has a dismissal rate of 50 percent.

Yet Black filers consistently face an 80 percent chance of having their bankruptcy dismissed. In addition, Black filers using Chapter 13 were 28 percent more likely to be dismissed than other filers.

Learn more about the revealing study at Finurah.

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Subtle Form of Implicit Bias?: Study Finds Black Americans Are More Likely to Have Their Bankruptcy Filing Dismissed or Steered Toward Filing Chapter...