A couple who owns a Florida hotel recently filed for a personal Chapter 11 bankruptcy. And while the reasons for the bankruptcy filing were not immediately available, it is known that the hotel property is not included in the bankruptcy filing and that the couple has been involved in a number of real estate transactions and deals in the state.
With the trend in real estate recently, there is also always the chance that the downed housing market and economy played a role in their decision and financial need to file for Chapter 11 bankruptcy.
The action, which was filed on July 21, lists somewhere between $10 million and $50 million in both assets and liabilities.
In general, a Chapter 11 bankruptcy is typically used by businesses to reorganize debts, but as this couple’s recent filing proves, it can also be used by individuals to take control back of their finances, and is typically used by people who have large amounts of income and debt.
The typical route for a Chapter 11 is for a repayment plan to reorganize debts to be created and then presented to creditors in court. From there the creditors vote and can either decide to agree to the terms of the reorganization, or can reject those plans altogether.
If rejected, the reorganization plans can be reworked and re-presented to creditors, or in some cases a bankruptcy judge may order the creditors in what’s known as a “cram-down” to accept the plan, even if the creditors don’t want to.
Source: South Florida Business Journal, “El Palacio hotel owners file personal Chapter 11,” Paul Brinkman, 22 July 2011