Foreclosure. Divorce. Child support. Business debts. Bad investments.
The same things that led Bernie Kosar to need bankruptcy protection–first under Chapter 11 reorganization and then via a conversion to Chapter 7 liquidation–are what cause many other Americans to file for bankruptcy as well.
Yet despite the number of bankruptcies filed by celebrities and other high net-worth individuals, it still tends to surprise us to hear when someone like Bernie Kosar files for bankruptcy. The reality, of course, is that bankruptcy is often a function of a number of very routine occurrences in people’s lives, often involving chance and situations beyond an individual’s control.
In Kosar’s case, he started off filing a Chapter 11 in June 2009 in an attempt to work out a deal to repay his creditors while keeping some of his assets like his NFL pension. His original financial problems stemmed from a failed steakhouse chain business as well as real estate deals that went bad. And his primary creditors were the Cleveland Browns and some Florida banks.
Kosar’s situation changed apparently when his ex-wife began pressuring him for moneys owed including child support of $105,000. The bankruptcy judge appointed a trustee who urged the conversion to a Chapter 7 liquidation given that Kosar did not have a business plan that indicated that he would be likely to pay off the large amount of debt owed.
Typically, a Chapter 11 reorganization for an individual is only successful when there are sufficient assets to be able to pay off creditors. The advantage to the individual is that he or she is able to keep more of their personal assets.
In Kosar’s case, the conversion to Chapter 7 will likely mean that non-exempt assets (e.g., his NFL pension?) may be used to pay off creditors. Hence Chapter 11 was preferable, but not a feasible option at the end of the day. Lenny Dykstra, who filed for Chapter 11 last year, could for example find himself in a similar situation depending on how his case goes and what assets and future income he has.
Bankruptcy for celebrities and high net-worth individuals can be complicated. But it doesn’t have to be a rocky road.
A good bankruptcy attorney experienced with individual Chapter 11 cases can ensure that you plan appropriately and make well-thought-out strategic decisions to help reduce the bumps in your financial road.
For more information, please contact me for a free initial consultation. I have over 30 years of bankruptcy experience in New York and have handled bankruptcies for celebrities as well as average, hardworking Americans.
Contact Bruce Weiner, Esq.
EMAIL Bruce Weiner
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(718) 855-6840 (Local)
(866) 402-8476 (Toll Free)
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Go to chapter 11 bankruptcy lawyer Brooklyn NY to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.
