American companies frequently use the bankruptcy process to reorganize and help a business survive through difficult economic times. For similar reasons, Chapter 7 bankruptcy and Chapter 13 bankruptcy make sound financial sense for individuals and married couples who have fallen behind due to mounting debts caused by medical expenses, job loss and other difficulties.
One of the most notorious recent corporate bankruptcies in Arizona involves the local National Hockey League franchise, the Phoenix Coyotes. Since moving from Winnipeg in 1996, the club has not had a great deal of success, never making it past the conference quarterfinals and failing to make the playoffs as often as not. That led to financial troubles and previous owner Jerry Moyes’s decision to put the team in bankruptcy. NHL records indicate that the Coyotes lost $36.6 million this season.
One example of the major complexities that can arise in this type of business bankruptcy is the ongoing agreement that the team has with the City of Glendale, which built the Jobing.com Arena to host the Coyotes. Due to that obligation, the bankruptcy court prevented Moyes from selling to a Canadian buyer who would have relocated the team. The NHL finally emerged as owner, essentially by default, and is trying to bring in a new owner who may be able to make the business succeed in Arizona.
Consumer Bankruptcy Can Provide Effective Debt Relief
The closest analogy to this process is the liquidation of assets for a consumer who qualifies for Chapter 7 bankruptcy. Certain property – by no means all assets – must be liquidated to satisfy the claims of creditors to complete a discharge of debts owed by an individual or married couple. Arizona bankruptcy law details exemptions from the liquidation process, including retirement accounts, $150,000 in homestead equity, $5,000 in value in motor vehicles (double this value for a couple), and household items such as furniture.
Best of all, the process is much more simple. A Phoenix bankruptcy lawyer can further explain how the consumer bankruptcy process proceeds much more quickly than a large-scale business bankruptcy. But in the end, the goal is the same: to give the bankruptcy applicant a fresh start and a brighter financial future.