Billionaire Files for Chapter 11 Bankruptcy in New York

According to Crain’s Detroit Business, Billionaire Tom Gores of Platinum Equity LLC has received approval for Chapter 11 bankruptcy in New York. Chassix Holdings Inc., a company owned by Platinum Equity LLC, was not making its bond payments and had not kept up with suppliers’s payments due to slowing profits, and had the option to file for Chapter 11 bankruptcy or be forced to close. Eighty percent of Chassix’s unsecured bondholders and nearly 72 percent of secured bondholders approved the bankruptcy filing and restructuring payment plan.

Platinum Equity LLC’s stake in the company will be reduced, but operations will continue. As operations continue, Chassix Holdings Inc. say it intends to make its payments to suppliers on time to prevent necessary shipments from coming to a halt. Chassix was created in a merger between SMW Automotive Inc. and Diversified Machine Inc.

The company supplies General Motors and BMW with brakes and other automotive parts. Billionaire Tom Gores is also known for owning the Detroit Pistons of the NBA. Two of Chassix’s largest creditors are Grede Holdings LLC, and Central Corp. These suppliers had previously cut off Chassix’s supply of necessary materials prior to a bankruptcy deal being reached.

Bankruptcy Among Businesses and High Income Earners

While Chapter 7 and Chapter 13 bankruptcy are usually reserved for individuals, Chapter 11 bankruptcy is used by businesses who are unable to keep up with payments to creditors and investors. However, high-income individuals are sometimes able to use chapter 11 to file for personal bankruptcy in some cases.

NHL player Jack Johnson provides a good example of an individual who filed for Chapter 11 bankruptcy after making risky investments, despite earning over $18 million during his hockey career. Johnson expects to recover financially with the help of new advisors after his former advisors led him along the path of financial disaster. Chapter 11 bankruptcy is usually more complex and has longer payment plans than Chapter 13 bankruptcy.

Any individual who is considering filing for bankruptcy should have the support and counsel of an experienced law firm. Debt can be overwhelming for individuals, families and businesses. The assistance of a Maryland bankruptcy attorney can be the key to starting fresh and resolving a number of financial issues.

[Did You Know? After filing Chapter 11, an individual or company has 120 days to present a reorganization plan to the court.]

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