Bankruptcy Indiana

I read a lot - not only books, but newspapers, newsletters, magazines, websites, professional journals - you name it, and the purpose is always the same.  As a debt consolidation lawyer, offering the most up-to-date bankruptcy information in Indiana to readers and clients is one of my goals. 

Back in July of this year, I discussed an article I read in a financial planning journal calling attention to the fact that when cities and towns go bankrupt, investors who own the municipal bonds issued by those cities and towns suffer. (As an Indiana lawyer for bankruptcy, I know this hasn't happened in our state, but it could.) The bankruptcy judge sets up a plan for the city to repay its debts in order of priority, and typically the pensions of the firefighters, teachers, and police officers pension plans must be paid first.  Sometimes bondholders wait years to receive the interest payments they were expecting or to get the money back that they invested.

Then, just recently, I caught an article in the Wall Street Journal about investors and bankruptcy. There was one sentence in the article that I loved, because that one sentence about business bankruptcy sums up the principle that every good bankruptcy attorney in Indiana stands for.  The article is talking about mega-corporations who declare bankruptcy, but it's the principle that guides our work as we offer small business bankruptcy help in Indiana:

"The bankruptcy process was created decades ago
as a way to give ailing businesses a chance to heal and creditors a shot at repayment."

The Wall Street Journal talks about the way hedge funds and big investors actually buy and sell the debt of distressed companies from the creditors.  What happens is that the bankruptcy court, in trying to be fair to debtors and creditors, is no longer dealing with the creditors at all, but with big bond traders.  In Chapter 11 bankruptcy cases, for example, where creditors and debtors are supposed to work together to come up with a plan to keep the company running, the WSJ article explains that what often happens instead is that hedge funds and bond traders try to influence the process in a way that is most beneficial to themselves rather than to the company.

As a longtime Indianapolis bankruptcy lawyer with Zuckerberg bankruptcy law offices serving 55 counties in Indiana, this conflict of interest never arises for me.  First of all, we deal in small business bankruptcy in Indiana, not with mega-corporations, and of course we own no stock in our clients' companies. So why did I think it important to review this article here in Bankruptcy in Indiana/  The answers is contained in the WSJ article itself:   "…the judge is trying to guide an outcome that best serves the company and the wide array of those it owes."

The whole purpose of the new bankruptcy laws of Indiana is to treat all parties fairly, both the creditors and the debtors.  As I wrote many months ago, the basic ideas embodied in bankruptcy law is to protect debtors from collection activities, and allow a "reorganization" of debt.

It's important to provide a safety net for citizens who have fallen on hard times and who need a fresh start, I explained. Some bankruptcy filers are entrepreneurs who have taken an honest risk in establishing a business, but were later overwhelmed by forces in the economy that were beyond their control.  At the same time, unless creditors' rights are protected by the law, lenders will not be willing to take the risk of providing loans.