Wisconsin readers who keep track of business news may have heard that Robert Kraft, former CEO of the now out-of-operation First Edge Solutions Inc. and World Marketing Holdings LLC, filed for personal bankruptcy earlier this month. Kraft’s filing, which was made under Chapter 7 of the bankruptcy code, comes little more than half a year after he filed a Chapter 11 case for World Marketing.
Kraft’s Chapter 11 case actually combines three corporate entities in one case–separate companies for the Chicago, Dallas and Atlanta markets. According to the Chapter 11 filing, the company’s failure was apparently due to lack of adequate capital and long-term financing to get the business back on its feet. Kraft had purchased World Marketing in roughly a year before the bankruptcy filing.
Along with the Chapter 11 filing, Kraft resigned as CEO of First Edge. Prior to the bankruptcy filing, that company was put into receivership, which is not the bankruptcy process but somewhat related to it. Receivership is a process by which a party is put in a position of custodial responsibility for the property of others. In a business context, it is a process creditors may seek out when a company cannot meet its financial obligations. Companies that enter receivership are typically sold in parts.
When a receivership is filed, a state or federal court appoints a disinterested party to safeguard property subject to claims. Filing for receivership is not as common of a procedure as bankruptcy when a company is failing, but it a well-established option nevertheless. For creditors, particularly secured creditors, receivership can be beneficial in that it provides a forum to have a say regarding proceedings by and against the debtor. Creditors who feel they might benefit from moving to appoint a receiver should contact an attorney experienced in this area for guidance and representation.
Source:
Milwaukee Journal Sentinel, “Businessman Bobby Kraft files for personal bankruptcy,” Rick Romell, March 18, 2016.
Milwaukee Business Journal, “Bobby Kraft’s World Marketing heads for February bankruptcy auction,” Rich Kirchen, Dec. 11, 2015.
Milwaukee Journal Sentinel, “First Edge Solutions files for receivership,” Rick Romell, July 9, 2016.
