Bankruptcy & Contracts

[jerry367]

At what point can you enter into a contract with a company in bankruptcy without fear it'll be nullified?

 

[Goat Rodeo Cowboy]

That is a question best answered by your attorney.

From my limited non-attorney experience.... one of the benefits of entering bankruptcy when a business is troubled and known to be on thin-ice financially is that vendors know that during the bankruptcy your contract will not be broken by a flaky business operator. If you contract comes to an end it will be at the hands of the bankruptcy court. Supposedly the hand is being played with all the cards on the table, face-up, in bankruptcy.

Bankruptcy comes in many flavors: Chapter 7, chapter 11, chapter 13 and who knows what else. In the case of a small radio station, or a recording studio, etc., you need to know whether it is a personal bankruptcy or a corporate bankruptcy.

Are you beginning to see why this is really a question to ask your attorney?

 

[jerry367]

That is a question best answered by your attorney.

From my limited non-attorney experience.... one of the benefits of entering bankruptcy when a business is troubled and known to be on thin-ice financially is that vendors know that during the bankruptcy your contract will not be broken by a flaky business operator. If you contract comes to an end it will be at the hands of the bankruptcy court. Supposedly the hand is being played with all the cards on the table, face-up, in bankruptcy.

Bankruptcy comes in many flavors: Chapter 7, chapter 11, chapter 13 and who knows what else. In the case of a small radio station, or a recording studio, etc., you need to know whether it is a personal bankruptcy or a corporate bankruptcy.

Are you beginning to see why this is really a question to ask your attorney?

All I am referring to is employee contracts, not vendors. Also, chapter 11 is strictly persoanl, not business.

Often times contracts can be redone once bankruptcy has been filed, but what I would like to know is when binding contracts can be entered into once again.

 

[HowardMBurgers]

A lot depends on what the judge or assigned Receiver has established related to new contracts while in bankruptcy.

If the business regularly uses contractors or contracted talent, there will be some sort of verbiage that spells out the relationship limits while the business reorganizes. Before I'd enter into any contracts with a business in bankruptcy, I'd certainly enlist the advice of an attorney or qualified agent (if it was a talent contract) to review or modify the contract after a full understanding of the bankruptcy declaration.

Remember, if the business doesn't end up completing the reorganization or is ordered to liquidate, the contract won't be worth the paper its written on.

 

[Element9]

Many of those who work/worked for Citadel say the contract was never was worth a damn in the first place.

 

[PTBoardOp94]

All I am referring to is employee contracts, not vendors. Also, chapter 11 is strictly persoanl, not business.

Often times contracts can be redone once bankruptcy has been filed, but what I would like to know is when binding contracts can be entered into once again.

Correction: Chapter 13 is strictly personal. Chapter 11 is used by businesses quite frequently.

 

[Goat Rodeo Cowboy]

All I am referring to is employee contracts, not vendors. Also, chapter 11 is strictly persoanl, not business.

Often times contracts can be redone once bankruptcy has been filed, but what I would like to know is when binding contracts can be entered into once again.

I had ONE job in my broadcasting years that involved a contract. It ended up in court and the judge ridiculed and embarrassed the employer's lawyer over the poor craftsmanship and verbiage of the contract. Lesson learned. That is why I continue to encourage you to seek competent legal advice.

One of the questions you want to ask an attorney would be this: Is there anything in this contract that causes me to become just one more vendor standing down in the line somewhere with the other vendors rather than being an employee standing at the head of the line for wages if we find ourselves dealing with bankruptcy issues in the future.

 

[ropertex]

It's interesting that Citadel's stations owe hundreds of thousands in unpaid property taxes (mostly to school districts) and unpaid bills to local companies from tower maintenance, jingle and v/o people, carpet cleaners, fax machine toner and even the vending machine guy -- which has to be settled in bankruptcy court at probably 10 cents on the dollar, but Citadel petitioned the judge to make sure "talent" such as Mark Levin and Mike Huckabee get all their back and current pay at 100%. Bet you'd never get past the call screeners with that information!