Beware Bankruptcy Petition Preparers

When you are on the brink of bankruptcy, getting some much-needed advice and assistance can be a life-saver. But be careful who you trust. A Milwaukee area woman recently got busted for giving bad advice to filers in our area. 

Carolyn A. Word, who has also gone by the name Carolyn Dixon, may be criminally prosecuted for ignoring a 2010 order not to work as a bankruptcy petition preparer, and attempting to hide her post-2010 activity from the court. 

Who Are Bankruptcy Petition Preparers?

Bankruptcy petition preparers are non-attorneys who can — as their name suggests — help you prepare a bankruptcy petition. However, they are only typists. They are prohibited by law from giving legal advice. Petition preparers in the Eastern District of Wisconsin, which includes Milwaukee and the surrounding counties, may charge a maximum of $75 for their service. 

Word was previously barred from serving as a petition preparer, and fined because she overcharged low-income people for her services, and may have offered improper legal advice. However, it appears that she did not stop preparing petitions. Word got caught because she told one of her clients to lie to the court, and hide the fact that she had provided assistance. 

While there is nothing wrong with working with a bankruptcy petition preparer if all you need is someone to help you type up your petition, you should be careful about who you work with and be wary of any advice they try to give you. Working with an experienced bankruptcy attorney is a much better option. 

An attorney can do much more than help you fill out the piles of paperwork a bankruptcy requires. 

The first thing an attorney will do is help you figure out if bankruptcy is truly the best option for you, or if other actions could be taken to help get you back on track. 

If bankruptcy is the best path forward, the next step is figuring out which type of bankruptcy is right for you. Most people file under Chapter 7 or Chapter 13. A Chapter 7 bankruptcy is a traditional liquidation — your assets are sold off, the proceeds are used to pay off your debts, and most remaining debts are forgiven. A Chapter 13 bankruptcy is more like a corporate reorganization — you enter into a court-supervised repayment plan, and after a few years you are caught up on your payments and some debts are forgiven. An experienced attorney can help you determine which chapter it would be best for you to file under. 

The Benefits of Working with a Bankruptcy Attorney

Once you have filed your bankruptcy petition with the court, your attorney will work as your advocate and liaison with the court. You will never have to show up to court alone or answer questions without someone who is on your side explaining them to you. 

Perhaps more importantly, your attorney becomes a shield between you and your creditors. Once you obtain legal representation, you can tell your creditors they must speak to your lawyer instead of contacting you directly. 

The benefits of working with an experienced bankruptcy attorney are many. While others may offer you help with your bankruptcy case, what they can do for you is extremely limited. You should be suspicious of any non-attorney that says they can help you file for bankruptcy. 

I Scream, You Scream, We All Scream for Receivership

Schoep’s Ice Cream is one of the largest and oldest independent ice cream factories in the country. Since opening its doors in 1928, the Wisconsin-based business has grown to the point that it makes over 12 million gallons of ice cream every year. However, the company has fallen on hard times.  

Schoep’s owners recently asked the courts to put it under receivership, which is an alternative to filing for bankruptcy. In its petition, the company revealed that it owns assets with a book value of $21.3 million, but has $19.1 million in debt. The company will not be able to pay off its creditors as its financial obligations come due, and it fears that the fair market value of its assets is significantly less than the book value. 

For Sale — As Is, No Warranty 

Because this is a receivership, and not a bankruptcy, the court-appointed attorney handling the case will be tasked with selling Schoep’s as an operating business, and distributing the money generated by the sale to the company’s creditors. There are reportedly already buyers interested, so this should not be a difficult task. 

The goal is to have the company operate as the same business after the sale, with the same name and employees it has now. It will just have different owners and less debt — or perhaps different debt if the buyer has to finance the sale.

The Difference Between A Receivership And A Bankruptcy 

This is a textbook example of how receiverships are different than bankruptcies. 

If the company had filed for bankruptcy instead, it would either go through a restructuring or it would wind down operations and liquidate its assets. However, the financial problems the company is facing are reportedly due to the sudden loss of a couple of big clients. Unless this is the first sign of a shifting market, the company should be able to recover from this over the long-run and continue to churn out frozen treats to delight the masses. 

Entering into a receivership allows the current owners to exit the business without shutting down the business. This is important to many business owners, who have poured their blood, sweat, and tears into building something they do not want to see die. Handing over control to a new owner is a better alternative than shutting down, laying off loyal employees, and seeing all that hard work go down the drain. 

Helping Businesses In the Milwaukee Area Find A Path Forward

At Hanson & Payne, we have helped numerous business owners in the Milwaukee area navigate the receivership process. We have also advised business owners that are unsure if receivership or bankruptcy the best option. We have experience with both processes, so our firm can help business owners understand what their options are, and what choosing one over the other would mean for their business. Contact us today to schedule and initial consultation. 

After Years of Bankruptcy, University of Wisconsin Oshkosh Foundation Comes Out Still Intact

In the event that a business becomes unable to pay off its outstanding debts, it may seek bankruptcy protection under either Chapter 7 or Chapter 11. Under Chapter 7, the business stops operating and a designated trustee sells off the business assets. The proceeds of these sales are distributed to creditors and anything left over goes back to the owners of the company.

Under Chapter 11, a business is allowed to continue to operate and reorganize. Usually, the debtor will maintain control of its business through the process with oversight provided by the bankruptcy court. The result of Chapter 11 will either be the successful reorganization of the business, conversion to Chapter 7 bankruptcy proceedings, or dismissal. After years of going through Chapter 11 bankruptcy, the University of Wisconsin Oshkosh Foundation successfully reorganize and is continuing operations after bankruptcy proceedings have ended.

After Years of Bankruptcy, University of Wisconsin Oshkosh Foundation Comes Out Still Intact

The University of Wisconsin Oshkosh Foundation went through three years of Chapter 11 bankruptcy proceedings. The bankruptcy reorganization plan for the Foundation was successful and it now has almost $20 million in assets and the ability to fund hundreds of student scholarships to be valued in the thousands. Additionally, the Chair of the Foundation, Tim Mulloy reports that the foundation has received $3 million in the past few months alone.

The Foundation stumbled into some financial issues when it struggled with several real estate investments that were not proving fruitful. The Foundation required financial support from the university. However, it was suspected that this ran afoul of Article VIII, Section 3 of the Wisconsin Constitution which prohibits the use of public money for private purposes. It was later revealed that the acts of the University to support the Foundation were not, in fact, unconstitutional. The potentially illicit transactions and the media coverage reporting them as such, however, did nothing but hurt the financial situation of the Foundation and they were forced into Chapter 11 bankruptcy.

Now that the Oshkosh Foundation has successfully come out from Chapter 11 bankruptcy proceedings, it is planning for the future. During the who ordeal, the University of Wisconsin-Oshkosh announced the creation of another foundation called the Titan Alumni Foundation. This foundation also solicits donations to fund scholarships. Now there are plans in the works for the two foundations to merge.

Wisconsin Bankruptcy Attorneys

Bankruptcy is not necessarily the end for your business. Like the Oshkosh Foundation, your business can successfully survive and thrive after bankruptcy. The dedicated bankruptcy attorneys at Hanson & Payne, LLC are here to provide clients with unparalleled support. We protect and guide you and your business through bankruptcy to meet your goals. If one of your goals is to see your business thrive after bankruptcy, we are here to help make that happen. For all of your bankruptcy needs, contact us today.