Legal Question in Bankruptcy in Nevada
Legal ramifications of doing business with a Ch11 company
Hi,
I want to stage--name removed--show at--name removed--hotel that has filed for Chapter 11 bankruptcy in Nevada. They are willing to let me use the space if I do the show for free so they attract patrons to stay at the hotel. I want to sign--name removed--contract with them but am worried that I will spend--name removed--lot of money preparing for the show and their reorganization doesn't work out and they liquidate.
Should I sign the contract?
Thanks!
2 Answers from Attorneys
Re: Legal ramifications of doing business with a Ch11 company
Doing business with a company in Chap 11 is no different than if the company is not, except you know they have financial problems. Three things can happen. 1. The Comapany can have its Chap 11 plan confirmed and it will continue to do business; 2 The Chap 11 will be converted to a Chap 7 liquidation and it will be up to the Chap 7 trustee whether the hotel continues in business while a buyer is found and 3) the Chap 11 is dismissesd and the hotel goes back to business as before. If you are going to expend money based on a contract while the hotel is in Chap 11, you will have to evaluate the prospects of the company and make some sort of risk /reward analysis. The company can contract with you while it is in Chap 11, in the normal course of business, but like any other business tranaction there are downside risks. Larry Maun 713.266.2560; email: [email protected]
Re: Legal ramifications of doing business with a Ch11 company
Entering into a contract with any entity in Chapter 11 dictates some caution. Many companies operate effectively within a chapter 11 and essentially the day to day operations can be viewed as "business as usual". I would suggest you determine the likelihood of the company's success in the context of the Chapter 11. Ask yourself (or even better have an attorney analyze such questions) how long has the company been in Ch. 11, what are the terms of the plan of reorganization, etc. Please feel free to contact me personally to discuss your situation in greater detail. ph. (214) 979-7330 or (800) 303-0720
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