According to the Associated Press, the Los Angeles Dodgers filed for Chapter 11 bankruptcy protection on Monday June 27, 2011. Frank and Jamie McCourt, owners of the Dodgers, divorced two years ago. She operated as the CEO of the Dodgers while the two were married, but when they divorced, a fight for ownership ensued after Frank fired his former wife. Jamie McCourt, reportedly, is livid over the fact her former husband filed for bankruptcy protection, further complicating her unsettled ownership issues.
Frank McCourt is blaming baseball Commissioner Bud Selig for the bankruptcy. According to McCourt, Selig rejected a proposed TV deal last week that would have provided the franchise with $385 million of much needed upfront money.
What McCourt is not discussing in the news is the fact he and his former wife lived one of the most lavish lifestyles, extreme even by the standards of Los Angeles’ super rich. Divorce court records revealed multiple lavish homes, private security, country club memberships, and even a six-figure hair stylist on call for the couple.
Whatever really caused McCourt to file for bankruptcy protection, whether it was the divorce, personal lifestyle, or fights with baseball’s Commissioner, his income was obviously not enough to meet all of his living and business expenses. McCourt simply did what most in that situation would do, file for bankruptcy protection.
There are basically two types of bankruptcies an individual in business can file- a Chapter 13 Bankruptcy or a Chapter 11 Bankruptcy.
Chapter 13 Bankruptcy, known as a wage earner’s plan, enables individuals either employed or in business to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years.
If the debtor’s current monthly income is less than the applicable state median, the plan will be for three years, unless the court approves a longer period “for cause.” If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years. During the plan, creditors may not start or continue collection proceedings.
Chapter 11 Bankruptcy, used primarily for business bankruptcies, is very similar to Chapter 13 Bankruptcy, but a trustee can run the daily operations of the business. In Chapter 11 Bankruptcy, unless a separate trustee is appointed for cause, the debtor, as debtor in possession, acts as trustee of the business. Chapter 11 Bankruptcy repayment plans also have a more flexible payment schedule. The Bankruptcy Code does not specifically apply a timetable to the plan, but most Chapter 11 plans are finished well inside of 3 years, depending on the size of the business.
There are a lot of reasons individuals and businesses file for bankruptcy protection. Most bankruptcies in the United States are caused by a divorce, a catastrophic event, a foreclosure, a sudden loss of income, a poor economy, or an unexpected medical expense. Divorce, the inability to secure the TV contract, and a lavish lifestyle all contributed to the need for bankruptcy protection for the McCourts.
If, like Frank McCourt, you find that you are bankrupt, you may need to talk to a bankruptcy attorney. If you need relief from the stress of debt and you live in or around the metropolitan areas of Minneapolis, or St. Paul, Minnesota and Wisconsin, contact us at www.betterbankruptcy.com. We will help you find a bankruptcy attorney in your area who can answer your bankruptcy questions.
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