San Francisco Bankruptcy Law Blog

When a health emergency occurs, every attempt is made to get the medical care required and families look for ways to buckle down and survive the crisis. Many are able to, but some health problems are more complicated and can last a lifetime. When that happens, everything is threatened, including the very home that provides sanctuary for the sick family member. When medical debt spirals out of control, the economic stability of the entire family is at risk.

One California couple is doing what it can to weather the storm surrounding their 10-year-old daughter. The girl was born with kidney problems, which did not allow her to grow at a normal pace. Over the past 10 years, her life has been a combination of constant medications and a search for a compatible kidney donor. It is very difficult to find a donor child for a suitable kidney. When one could not be located, the child's mother donated her own.

Filing for bankruptcy is sometimes the best solution for a company, even a company that has received $535 million in guaranteed federal funding and more than a billion dollars in private investments. Unfortunately, the solar panel industry is under attack in the United States. In the last month alone, three major US solar manufacturers filed for bankruptcy debt relief protection. While California-based Solyndra had received a government loan guarantee as well as other investment funds, it could not escape the declining market caused by stiff competition from larger Asian rivals and a related drop of 42 percent in the price of solar panels this year alone.

While the US Department of Energy (DOE) and the White House are disappointed in the loss of its investment and the business failure of Solyndra, it pointed to several factors. First, it noted the loan guarantee was based on Solyndra's increased business revenue of 2,000 percent over three years, documented by more than 1,000 installations in over 20 countries. It also pointed out private investors flocked to support the company's efforts. The DOE further offered that these government investment efforts were directed to increasing jobs and thus improving the country's economy. While acknowledging the plan did not succeed in this instance, it said the DOE's overall strategy would more than make up for the loss.

Filing for bankruptcy is not an easy decision for a California company that has been in business for many years. Some businesses are able to seek Chapter 13 protection, allowing the opportunity to present a plan for keeping the company open. A Chapter 13 petition must still make sense, the idea being to devise a strategy to keep things afloat, while demonstrating how creditors will be repaid the debts already owed. But sometimes the need for debt relief is too great and the expenses too substantial to justify continued operation. In that instance, filing for bankruptcy by a Chapter 7 petition may make more sense.

One of northern California's largest family-owned lumberyards closed its doors in August, having filed a petition for Chapter 7 liquidation. The news saddened many people, even their competitors. The company first opened in 1946 when the grandfather of the current owner came out of the service and said he never wanted to work for someone else again. The business thrived for many years, at one point having more than 200 employees. It was named 2nd Assembly District Small Business of the Year in 2006. Unfortunately, as the housing market went south, so did the lumber business.

Often, businesses filing for bankruptcy protection do so in order to help the company stay in operation. The financial crisis of the past few years in California and across our country has hit different industries in different ways. Chain restaurants, for example, have had to cope with families eating out less often as well as rising costs of ingredients and other materials. Faced with the need to reorganize or shut their doors forever, some businesses have decided a bankruptcy filing just might be the best way to keep their business. Those are not easy decisions, but a well thought-out and carefully executed plan to create debt solutions is sometimes necessary to stay in the ballgame.

In June, popular restaurant chain Marie Callender's filed for bankruptcy protection. Restaurant executives wanted to stay in business and needed to obtain temporary debt relief so they could help the company regain a more solid financial footing. As a result of the planned reorganization in bankruptcy court, the parent company closed 31 of its U.S. restaurants. Thirteen of those restaurants were in California. As the company continued to work through its financial issues with a bankruptcy trustee, it was announced on July 21 that four more restaurants were to close.