South Florida Multispecialty Associates, LLC, with offices located in Miami Beach and Aventura, has filed a voluntary Chapter 11 bankruptcy. The medical practice has 50 employees and reportedly sought bankruptcy protection after a medical malpractice plaintiff won a garnishment on its bank accounts.
The medical group was apparently unable to make its first $100,000 payment that was part of a $250,000 settlement reached in May of this year. The medical group was reportedly relying on a large payment due from one of its insurance providers for services rendered in order to meet the plaintiff’s first payment deadline, but it was delayed.
All of the medical group’s bank accounts were frozen due to the garnishment order, so it was necessary for the practice to seek Chapter 11 protection to gain access to the accounts and continue making its own payroll. According to the debtor’s pleadings, the practice has $2.6 million in unsecured claims and $6.2 in accounts receivable.
If your company is facing financial struggles or litigation that has resulted in assets being frozen, it may be time to consider filing a Chapter 11 bankruptcy. Your business can continue to operate during your filing. Chapter 11 bankruptcy is often referred to as a “rehabilitation” bankruptcy for individuals and businesses, but it is most commonly used by companies. The Chapter 11 debtor (called the “debtor-in-possession”) sets forth a plan of reorganization that outlines how the creditors will be paid (in full or in part) and if the debtor intends to cancel any of its contracts. Creditors can also propose a Chapter 11 plan of repayment. The plan must be approved by a certain percentage of your creditors and by the bankruptcy court. A Chapter 11 trustee is appointed to supervise your case and ensure that priority claims are paid and assets or managed properly.
A Chapter 11 bankruptcy can be a complex process that typically requires the assistance of a seasoned bankruptcy attorney, but it can allow your business to manage its finances and emerge stronger. To learn more, contact us for a free consultation.