Rationale for Distinctions in How Chapter 13 Wage-earner Bankruptcies and Chapter 11 Corporate Reorganizations Progress

It has just been announced that the company, Digital Domain Media Group (“Digital Domain”), won approval as a bankruptcy debtor for post-petition financing in its Chapter 11 corporate reorganization. As is the case for many companies undergoing reorganization via the Chapter 11 bankruptcy process, Digital Domain does not merely want to utilize the bankruptcy process to rid itself of its debts. Rather it seeks to shed enough of its debt so it can put its corporate balance sheet in a position whereby it can continue to operate its business effectively and profitably. Hence, it seeks to secure a special line of financing to keep itself afloat until the bankruptcy process concludes. It is no secret that companies filing for bankruptcy protection face difficult challenges in maintaining enough revenue to maintain its operations throughout the pendency of the bankruptcy case.


Likewise, individuals who file Chapter 13 cases frequently seek to maintain ownership of their home during the course that the bankruptcy plan is implemented. While Chapter 13 debtors do use the process of discharge to rid it selves of past debts, they also pay their home lender – or its subsequent assignee – monthly payments towards their mortgage. The underlying rationale is that the individual debtor should have a way to keep their home so they have less disruption in the process of raising one’s family and meeting the obligation of earning a living.


But any similarities in the underlying rationales seem to end there. First of all, for companies such as Digital Domain, they are securing new financing during the bankruptcy process whereas Chapter 13 debtors merely are paying the debt already owed their mortgage company. Furthermore, there is a more vital distinction. Corporations are merely artificial entities created under the law not natural beings. Their continued existence may be very extremely important to its employees who want to stay employed or shareholders who do not want to lose their investment. But individuals filing for Chapter 13 opt for bankruptcy protection because they conclude that it offers the best chance for them to continue to provide for themselves and their families.


In Albuquerque, Giddens & Gatton Law, P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to disposition of property in Chapter 7, Chapter 11 and Chapter 13 cases..

The New Mexico firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, P.C. at (505) 633-6298 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.