Three Banks and a Venture Capital Company Push Music Entrepreneur Lou Pearlman Toward Personal Bankruptcy
In Central Florida, an involuntary petition for personal bankruptcy against music entrepreneur Lou Pearlman was filed by American Bank of St. Paul, Minnesota, First National Bank of Trust of Williston, North Dakota, Tatonka Capital Corp. of Denver, Colorado and Integra Bank of Evansville, Indiana. They claim he owes them a combined $48 million.
Claims by each petitioner:
· American Bank $27.1 million
· Tatonka $6.2 million
· First National Bank $14.2 million
· Integra $895,000
In an unrelated Chapter 11 bankruptcy petition, a number of Pearlman’s downtown properties moved closer toward the auction block.
Involuntary Bankruptcy
In certain instances, creditors can petition a court to have a debtor be declared insolvent. A bankruptcy that takes place without the debtors consent—should the court grant relief—is called an involuntary bankruptcy. These can only take place under Chapter 7 and Chapter 11 of the U.S. Bankruptcy Code. If the court denies the involuntary bankruptcy petition, a debtor can be awarded attorney costs and fees. The debtor can even be awarded punitive damages.
The Process:
When a creditor files a petition for involuntary bankruptcy, the debtor can file objections for up to 20 days. A trial would then take place. If the debtor does not file objections, the bankruptcy will usually go forward.
An involuntary bankruptcy petition filed under Chapter 11—lets the debtor stay in business while developing a reorganization plan. The creditors are then repaid their debt from the business’s cash flow. Chapter 7, however, forces a liquidation of the debtor’s assets. Only creditors whose claims have been approved by the bankruptcy court are paid from the debtor’s estate.
Sagaria Law, P.C. represents clients in Santa Clara County, Alameda County, and Monterey County (including the cities of San Jose, Cupertino, Oakland, Berkeley, and Carmel), who wish to seek bankruptcy protection under Chapter 7, Chapter 11, and Chapter 13 of the U.S. bankruptcy code. Contact Sagaria Law, P.C. to speak with one of our attorneys for your free consultation.
4 creditors hit Pearlman with bankruptcy petition, Orlando Sentinel.com, March 3, 2007
Related Web Resources:
Involuntary Bankruptcy, CPA Finder
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