How Long Does It Take To File For Bankruptcy?

It’s been almost two years since the Wisconsin-based retail chain Shopko filed for bankruptcy, but some lingering issues related to its Chapter 11 filing are just now being resolved. Thankfully, most bankruptcy cases do not last this long. 

What’s Going On With Shopko? 

Shopko filed for Chapter 11 bankruptcy in January 2019. Their plan was to use the tools offered by Chapter 11 to downsize, reorganize, and regroup while remaining in business. However, it was unable to do so and ultimately had to shut down completely. The chain closed its doors in June 2019. 

Now, almost two years after its initial filing, and well over a year since it ceased operations, Shopko’s bankruptcy is still making headlines. The company has just reached a settlement with thousands of former employees who filed a class-action lawsuit seeking severance payments they allege they were promised but never received

“Shopko denies that it owes any severance pay. Nevertheless, Shopko has reached an agreement with the Class Representatives to settle the asserted claims for the entire class of similarly situated former employees,” reads the class action settlement announcement.

$3,018,434.78 will be distributed to the employees who are part of the class action and their attorneys. If any of the checks are not cashed within 180 days after issuance or returned as void, the funds will go to Brown County United Way and Feeding America Eastern Wisconsin.

Is This Typical? 

What is going on with the Shopko bankruptcy is not typical, but it is not unheard of. 

Businesses that file for bankruptcy under Chapter 11 are often successful at reorganizing and staying in business. If a business wants to shut down, or finds that it must shut down, it typically files under Chapter 7 or converts its Chapter 11 case to a Chapter 7 case. 

Most Chapter 11 cases wrap up within 6 months to 2 years. Shopko is still within that 2-year window, but it is pushing it. The COVID-19 pandemic has played a role in dragging out the case, but Shopko has also faced some unique challenges. Its reorganization plan was rejected by the bankruptcy court, it shifted from reorganizing to shutting down, and it has been dealing with the class action lawsuit discussed above. 

Most Bankruptcy Cases Do Not Last This Long

Even in the midst of the pandemic, most bankruptcy cases are resolved quicker than the Shopko case. Even seemingly complex commercial bankruptcies filed under Chapter 11 can be processed quickly if the reorganization plan is solid and creditors are on board with it or have filed a straightforward adversary proceeding that can be quickly resolved. Chapter 7 cases rarely take over a year to process. 

Hanson & Payne has years of experience helping businesses in the Milwaukee area navigate the bankruptcy process. We have represented companies filing for bankruptcy, creditors, and commercial lenders, and have a reputation for resolving cases quickly so everyone involved can move forward. If you are looking for a reliable and experienced legal team you can trust to swiftly guide you through what can be a complex and frustrating process, let’s talk