Alabama State Bar

Chapter 11 bankruptcy has been a graveyard for far too many small businesses. Too often, small businesses enter a Chapter 11 bankruptcy case only to have the bankruptcy case subsequently dismissed or converted to liquidation in Chapter 7.

Rising interest rates, inflation, and a global economic slowdown create the perfect storm, pushing some companies into financial distress. These conditions can also create opportunities for investors to make strategic acquisitions of distressed assets.

As a lawyer who defends healthcare providers that continued to care for patients during the COVID-19 pandemic, I take a different view from my opposing counsel who published an article in the September edition of The Alabama Lawyer.[i] See David Wirtes, Jr., Joseph D. Steadman, Aaron N. Maples, & Joseph D. Wirtes, Are There Constitutional Issues with Alabama’s Gubernatorial and Legislative Responses to the COVID-19 Pandemic?, 83 Ala. Law. 311 (Sept. 2022) (the “September Article”).

ABAP is a statewide project created to help debtors who need a chapter 7 bankruptcy but can’t afford the attorney’s fees to file. All five volunteer lawyer programs in the state participate, enabling ABAP to serve each of Alabama’s 67 counties.

That dreaded word – “bankruptcy!” No other area of practice quite strikes fear into the minds of state court practitioners and newbie attorneys than bankruptcy.

Because bankruptcy can intervene into many other areas of the law, every lawyer, even ones who never practice in the bankruptcy courts, should be aware of the general provisions outlined in this article so that they and their clients can avoid violating the automatic stay.