A previous post here discussed how sexual abuse lawsuits are forcing companies to seek protection under either Chapter 7 or Chapter 11 of the Bankruptcy Code. But, there is another issue that may cause companies to seek bankruptcy protection: embezzlement by a trusted employee.
Many factors can force a business to consider bankruptcy, ranging from management errors to unexpected loss of customers to natural disasters. Another kind of threat to an organization's financial well-being has forced several organizations to consider file a Chapter 11 petition: lawsuits from victims of alleged sexual abuse. One of the nation's most iconic organizations, the Boy Scouts of America, an organization with many connections in Rockland County, is apparently seeking advice about bankruptcy in response to a number of lawsuits alleging that young boys were abused by BSA employees or volunteers.
One of the principal concerns of dealing with a person or corporation that is in financial difficulty is the possible mismanagement of the debtor business. Assets may be sold for less than fair market value or simply hidden from creditors. The debtor may decide to pay some creditors and not others. The bankruptcy code has a provision that creditors can use to protect themselves: involuntary bankruptcy.
In 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure Act, giving rise to the convenient acronym, "CARD Act." The Act is intended to protect consumers from deceptive and abusive practices by credit card issuers. Despite the widespread use of credit cards by residents of Rockland County, very few people are aware of the act or are knowledgeable about its key provisions.