As we have discussed in our last few posts on our Miami bankruptcy law blog, bankruptcy does not have to be a last resort for those who are experiencing financial distress. Bankruptcy is also an important tool for some who want to strategically prepare for a foreseeable period of financial hardship or strain.
Jackson Hewitt Tax Service Inc recently filed bankruptcy in an effort to restructure the company’s debt. The company hopes to have their bankruptcy plan approved within 60 days so that the company can prepare to serve its customers during next year’s tax season.
The company’s liabilities include $225 million in loans, which is estimated to be more than what the tax service is worth. Jackson Hewitt offers 5,900 locations but does plan to close nearly 100 in the bankruptcy pan. The company also hopes to cancel its stock.
In preparation for a bank loan coming due in October, Jackson Hewitt decided that filing for bankruptcy protection would be a strategic move allowing for the company to restructure the loan and other debts. Part of the reorganization plan includes a new loan of $100 million and a revolving credit agreement of $115 million. The new equity would then be distributed amongst the company’s lenders.
The bankruptcy plan would eliminate the company’s unsecured debt because the company claims that there would be no money left after the bankruptcy to pay off unsecured debts.
Filing for Chapter 13 bankruptcy protection in Florida allows individuals to strategically restructure their personal debts. Before waiting until bankruptcy becomes a last resort, individuals can evaluate their debts and assets now and come up with a bankruptcy plan that allows them to restructure their finances before their finances get out of control.
Reuters News & Insight: “Jackson Hewitt sees quick bankruptcy plan approval,” Tom Hals, 25 May 2011