Chapter 7 of Title 11 U.S. Code is the bankruptcy code that governs the process of liquidation under the bankruptcy laws of the U.S. In contrast to bankruptcy under Chapter 11 and Chapter 13 , which govern the process of reorganization of a debtor , Chapter 7 bankruptcy is the most common form of bankruptcy in the U.S.
45-526: Halcyon Studios, LLC , formerly known as Sonar Entertainment , RHI Entertainment , Hallmark Entertainment , Qintex Entertainment , HRI Group and Robert Halmi Inc. , was an American entertainment company specializing in the production and distribution of scripted television content, part of Chicken Soup for the Soul Entertainment . It was founded in 1979 by Robert Halmi Jr. and Robert Halmi Sr. (1924–2014) as Robert Halmi, Inc. The company uses
90-576: A 52% stake in the studio, which was renamed as RHI Entertainment; for a time, RHI productions and New Line's films were distributed to television stations under the banner New Line Television Distribution. In 1992, RHI Entertainment made a deal with Cabin Fever Entertainment to distribute its library on home video. Hallmark Cards agreed to purchase RHI in April 1994. RHI had a 1,800 plus hours film library at that time. Hallmark Entertainment
135-482: A Chapter 7 bankruptcy case. However, BAPCPA limited the ability of debtors to avoid liens through bankruptcy. The definition of "household goods" was changed limiting "electronic equipment" to one radio, one television, one VCR, and one personal computer with related equipment. The definition now excludes works of art not created by the debtor or a relative of the debtor, jewelry worth more than $ 500 (except wedding rings), and motor vehicles (§522(f)(1)(B)). Prior to BAPCPA,
180-418: A Chapter 7 debtor does not complete the course, this constitutes grounds for denial of discharge pursuant to new §727(a)(11). The financial management program is experimental and the effectiveness of the program is to be studied for 18 months. Theoretically, if the educational courses prove to be ineffective, the requirement may disappear. BAPCPA attempted to eliminate the perceived "forum shopping" by changing
225-525: A bankruptcy attorney. On October 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) went into effect. This legislation was the biggest reform to the bankruptcy laws since 1978. The legislation was enacted after years of lobbying efforts by banks and lending institutions and was intended to prevent abuses of the bankruptcy laws. The changes to Chapter 7 were extensive. The most noteworthy change brought by
270-544: A bankruptcy judge ordered to convert Chicken Soup for the Soul Entertainment's Chapter 11 bankruptcy into a Chapter 7 bankruptcy liquidation after accusing the company's previous CEO of misusing the business and failing to pay employees or support healthcare. With the Chapter 7 conversion, the company's assets will be liquidated, resulting in the cessation of its subsidiaries, including Halcyon Studios. Liquidation has not occurred yet as of October 2024. As Qintex Entertainment,
315-403: A challenge to the debtor's Chapter 7 filing is whether the debtor can otherwise afford to repay some or all of his debts out of disposable income in the five year time frame provided by Chapter 13. If so, then the U.S. Trustee may succeed in preventing the debtor from receiving a discharge under Chapter 7, effectively forcing the debtor into Chapter 13. Some bankruptcy practitioners assert that
360-411: A debtor an opportunity to adjust income by documenting additional expenses or loss of income in situations caused by a medical condition or being called or order to active military service. However, the assumption of abuse is only rebutted where the additional expenses or adjustments for loss of income are significant enough to change the outcome of the means test. Otherwise, abuse is still presumed despite
405-405: A federal court under Chapter 7, which means that the business ceases operations unless those operations are continued by the Chapter 7 trustee. In a Chapter 7 bankruptcy, the trustee is appointed almost immediately, with broad powers to examine the finances of the business in bankruptcy; generally, the trustee sells the assets and distributes the money to the creditors. The investors who took
450-470: A homestead can not be exempted. The only exception is if the value was transferred from another homestead within the same state or if the homestead is the principal residence of a family farmer (§522(p)). This "cap" would apply in situations where a debtor has purchased a new homestead in a different state, or where the debtor has increased the value to his or her homestead (presumably through a remodeling or addition). Some types of liens may be avoided through
495-513: A mix of cash ($ 8 million) and stock (newly issued Series A preferred stock and Class A common stock). The deal included an estimated 4,000 movies and TV series from the 1091 catalog, as well as its portfolio of free, ad-supported networks and channels. On May 11, 2022, Chicken Soup for the Soul Entertainment announced its intention to acquire Redbox for $ 357 million ($ 36 million in stock and $ 321 million in assumed debt). The acquisition closed on August 11, 2022. On April 1, 2024, Chicken Soup for
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#1732791951987540-424: A new board of directors was installed. On July 5, the company was able to secure funding to restore payroll and benefits. On July 10, 2024, a bankruptcy judge ordered Chicken Soup for the Soul Entertainment's Chapter 11 bankruptcy to be converted into a Chapter 7 bankruptcy liquidation after accusing Rouhana of misusing the business and failing to pay employees or support healthcare. With the Chapter 7 conversion,
585-453: A potential Chapter 11 bankruptcy protection filing. In June 2024, chairman and CEO Bill Rouhana removed the company's board of directors. On June 29, the company filed for Chapter 11 bankruptcy protection after cutting benefits in May, missing a week of paying its employees, and failing to secure financing. On July 1, 2024, former federal prosecutor Bart Schwartz replaced Rouhana as CEO, and
630-512: A presumption of abuse is found under the means test, it may only be rebutted in the case of "special circumstances." Debtors whose income is below the state's median income are not subject to the means test. Under this test, any debtor with more than $ 182.50 in monthly disposable income, under the formula, would face a presumption of abuse. Notably, the Code-calculated income is based on the prior six months and may be higher or lower than
675-553: A yet to be disclosed preferential stake in Chicken Soup for the Soul Entertainment, giving them full control of the ad-supported streaming service. As of 2020, the Chicken Soup for the Soul series included more than 250 titles. In April 2021, Chicken Soup for the Soul acquired the film and television catalogue of Sonar Entertainment . In return, Sonar will hold a 5 percent stake in a new AVOD network featuring its library. Through
720-452: Is already extremely low. Also, new credit extended post-petition is not covered by the discharge, so creditors may offer new credit to the newly-bankrupt. Official Federal bankruptcy forms are prescribed in the relevant Rules, and are a computer based equivalent option of paper forms. Software can also be used, which generates court-ready forms and is more simple for users. Bankruptcy petition preparers can aid in completing applications, as can
765-449: Is not available to individuals who have had bankruptcy cases dismissed within the prior 180 days under specified circumstances. In a Chapter 7 bankruptcy, the individual is allowed to keep certain exempt property . Most liens , however (such as real estate mortgages and security interests for car loans), survive. The value of property that can be claimed as exempt varies from state to state. Other assets, if any, are sold ( liquidated ) by
810-543: The Hal Roach Studios library, and other material previously released and/or produced by predecessor companies Qintex, RHI, Cabin Fever, and Hallmark. On May 3, 2021, CSS announced it would launch Halcyon Television, a scripted television studio. On March 27, 2023, Shout! Factory licensed digital distribution and streaming rights to 189 titles from Halcyon Studios. On April 23, 2024, its parent Chicken Soup for
855-542: The NASDAQ under the ticker symbol "RHIE". On December 10, 2010, RHI filed for Chapter 11 Bankruptcy . The company emerged from bankruptcy on March 29, 2011. In March 2012, the company was renamed Sonar Entertainment. The name change stemmed from the Halmis leaving the company. On April 9, 2021, Chicken Soup for the Soul Entertainment signed a definitive agreement to acquire Sonar's assets, which currently includes most of
900-661: The "special circumstances." Another major change to the law enacted by BAPCPA deals with eligibility. §109(h) provides that a debtor will no longer be eligible to file under either Chapter 7 or Chapter 13 unless within 180 days prior to filing, the debtor received an "individual or group briefing" from a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator. The new legislation also requires that all individual debtors in either Chapter 7 or Chapter 13 complete an "instructional course concerning personal financial management." If
945-487: The 2005 BAPCPA amendments occurred within. The amendments effectively subject most debtors who have an income, as calculated by the Code, above the debtor's state census median income to a 60-month disposable income based test. This test is referred to as the " means test ". The means test provides for a finding of abuse if the debtor's disposable monthly income is higher than a specified floor amount or portion of their debts. If
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#1732791951987990-429: The Soul Entertainment announced a $ 636.6 million loss in 2023, and warned that without any options to generate additional financing, the company may be forced to liquidate or pause operations, and seek a potential Chapter 11 bankruptcy protection filing. On June 29, 2024, the company filed for Chapter 11 bankruptcy protection after missing a week of paying its employees and failing to secure financing. On July 10, 2024,
1035-474: The Soul Entertainment received a delisting notice from Nasdaq, informing that the company's stock would be delisted from the Nasdaq after it had 180 days to return to compliance. On April 23, 2024, Chicken Soup for the Soul Entertainment announced a $ 636.6 million loss in 2023, and warned that without any options to generate additional financing, the company may be forced to liquidate or pause operations, and seek
1080-449: The U.S. Bankruptcy Code that include, along with many other reforms, language imposing a means test for Chapter 7 cases. Creditworthiness and the likelihood of receiving a Chapter 7 discharge are some of the issues to be considered in determining whether to file bankruptcy. The effect of bankruptcy on creditworthiness in many cases might not be significant, because by the time many debtors are ready to file for bankruptcy, their credit score
1125-463: The U.S. Trustee has become more aggressive in recent times in pursuing (what the U.S. Trustee believes to be) abusive Chapter 7 filings. Through these activities the U.S. Trustee has achieved a regulatory system that Congress and most creditor-friendly commenters have consistently espoused, i.e., a formal means test for Chapter 7. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has clarified this area of concern by making changes to
1170-778: The acquisition, Chicken Soup now currently owns the North American rights to a majority of the Laurel & Hardy films and shorts, and most of the Our Gang library, as well as the holdings of the former RHI/Hallmark/Cabin Fever/Sonar outputs, and a majority of the Hal Roach library, all via their Halcyon Studios division. On March 2, 2022, Chicken Soup for the Soul Entertainment announced its acquisition of specialty film distributor, 1091 Pictures , for $ 15.55 million, in
1215-503: The amount of debt outstanding—have a legally enforceable right to the collateral securing their loans or to the equivalent value, a right that generally cannot be defeated by bankruptcy. They are therefore not entitled to participate in any distribution of liquidated assets that the bankruptcy trustee might make. In a Chapter 7 case, a corporation or partnership does not receive a bankruptcy discharge , whereas an individual may (see 11 U.S.C. § 727(a)(1) ). Once all assets of
1260-502: The bankruptcy, which tends to improve creditworthiness. Consumer credit and creditworthiness is a complex subject, however. Future ability to obtain credit is dependent on multiple factors and difficult to predict. Another aspect to consider is whether the debtor can avoid a challenge by the United States Trustee to his or her Chapter 7 filing as abusive . One factor in considering whether the U.S. Trustee can prevail in
1305-542: The brink of financial collapse, with their bid for the assets of MGM/UA Entertainment Co. failing, and entered chapter 11 bankruptcy in November 1989; their American operations had previously failed to provide timely payments to MCA Television (which Qintex had partnered with to distribute The New Leave It to Beaver ) the month prior. In 1990, Halmi re-purchased the assets of Qintex Entertainment for $ 40 million. In 1990, independent film studio New Line Cinema acquired
1350-556: The company announced plans to produce a television series and a film with Alcon Entertainment . Chicken Soup for the Soul has produced television programming with other partners, including PBS . In 2016, Chicken Soup for the Soul acquired a majority stake in the website A Plus . Chicken Soup for the Soul Entertainment went public in 2017. In November 2017, it acquired Screen Media Ventures, LLC, an independent television and film distribution company, which included Popcornflix , an ad-based online video service. On March 28, 2019, it
1395-510: The company co-produced the miniseries Lonesome Dove for CBS. As of December 2017, Sonar Entertainment's scripted series on-air, in production or slated to commence production included Mr. Mercedes , written by David E. Kelley, based on the novel by Stephen King , with Audience Network for DIRECTV and AT&T U-Verse ; Seasons 1 and 2 of The Son , starring Pierce Brosnan for AMC ; Seasons 1 and 2 of The Shannara Chronicles , for Spike ; and Das Boot , an eight-part series based on
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1440-437: The company's assets will be liquidated, resulting in the cessation of its subsidiaries, including Crackle , Popcornflix , Redbox and Screen Media . In addition, over 1,000 employees were laid off and over 26,000 Redbox kiosks were shut down permanently. Chapter 7 bankruptcy When a financially troubled business is unable to pay creditors, the business may file (or be compelled by creditors to file) for bankruptcy in
1485-458: The corporate or partnership debtor have been fully administered, the case is closed. The debts of the corporation or partnership theoretically continue to exist until applicable statutory periods of limitations expire. Individuals who reside, have a place of business, or own property in the United States may file for bankruptcy in a federal court under Chapter 7 ("straight bankruptcy", or liquidation). Chapter 7, as with other bankruptcy chapters,
1530-404: The date of filing the Chapter 7 petition. This contrasts with a Chapter 13 bankruptcy, which stays on an individual's credit report for seven years from the date of filing the Chapter 13 petition. This may make credit less available or may make lending terms less favorable, although high debt can have the same effect. That must be balanced against the removal of actual debt from the filer's record by
1575-447: The debtor can choose the federal exemptions. BAPCPA also "capped" the amount of a homestead exemption that a debtor can claim in bankruptcy, despite state exemption statutes. Also, there is a "cap" placed upon the homestead exemption in situations where the debtor, within 1,215 days (about 3 years and 4 months) preceding the bankruptcy case, added value to a homestead. The provision provides that "any value in excess of $ 125,000" added to
1620-490: The debtor's actual current income at the time of filing for bankruptcy. This has led some commentators to refer to the bankruptcy code's "current monthly income" as "presumed income". If the debtor's debt is not primarily consumer debt, then the means test is inapplicable. The inapplicability to non-consumer debt allows business debtors to "abuse" credit without repercussion unless the court finds "cause." "Special circumstances" does not confer judicial discretion; rather, it gives
1665-441: The direct-to-series model for TV series. Robert Halmi Inc. was founded in 1979 by Robert Halmi Sr. In July 1986, Robert Halmi Jr. took over as president and chief operating officer from Halmi Sr., who became the company's chairman and chief executive. From 1985 to 1988, RHI began a slowly-executed takeover of Hal Roach Studios , which gave the company North American rights to a majority of the Laurel & Hardy films and shorts,
1710-424: The dischargeability of the student loan), and fines and restitution imposed by a court for any crimes committed by the debtor. Spousal support is likewise not covered by a bankruptcy filing, nor are property settlements through divorce. Despite their potential non-dischargeability, all debts must be listed on bankruptcy schedules. A Chapter 7 bankruptcy stays on an individual's credit report for ten years from
1755-606: The film, for Sky. Chicken Soup for the Soul Entertainment Chicken Soup for the Soul Entertainment, Inc. was an American media company based in Cos Cob, Connecticut . Established in 2016, it was a subsidiary of the publisher Chicken Soup for the Soul . In 2008, the founders of Chicken Soup for the Soul , Jack Canfield and Mark Victor Hansen, sold the company to a new ownership group led by William J. Rouhana and Robert D. Jacobs. In 2013,
1800-525: The home entertainment and theatrical rights to the portion of the Our Gang shorts that were not retained by MGM , and a majority of Hal Roach Studios’ feature films. Robert Halmi Inc. was then renamed as HRI Group. Not too long after, HRI Group was taken over by the Australian financial services company Qintex (having joined the board of RHI when the merger with HRS was completed), and renamed Qintex Entertainment. However, Qintex quickly proved to be on
1845-417: The least amount of risk prior to the bankruptcy are generally paid first. For example, secured creditors will have taken less risk, because the credit that they will have extended is usually backed by collateral , such as assets of the debtor company. Fully secured creditors —that is, creditors, such as collateralized bondholders and mortgage lenders, for whom the value of collateral equals or exceeds
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1890-411: The rules on claiming exemptions. Under BAPCPA, a debtor who has moved from one state to another within two years of filing (730 days) the bankruptcy case must use exemptions from the place of the debtor's domicile for the majority of the 180-day period preceding the two years (730 days) before the filing §522(b)(3). If the new residency requirement would render the debtor ineligible for any exemption, then
1935-414: The trustee to repay creditors. Many types of unsecured debt are legally discharged by the bankruptcy proceeding, but there are various types of debt that are not discharged in a Chapter 7. Common exceptions to discharge include child support , income taxes less than three years old, property taxes , student loans (unless the debtor prevails in a difficult-to-win adversary proceeding brought to determine
1980-515: Was announced that Sony Pictures Television would sell a majority stake of Sony Crackle to Chicken Soup for the Soul Entertainment, after which the service would revert to the "Crackle" name. On November 5, 2019, it was announced that the Chicken Soup for the Soul Entertainment division would purchase foreign sales company Foresight Unlimited for the new Screen Media division. On December 15, 2020, Sony traded its remaining shares in Crackle for
2025-542: Was then formed with RHI and Signboard Hill Productions, another Hallmark Cards subsidiary, becoming subsidiaries. Hallmark sold the Filmation library and its rights to Entertainment Rights in March 2004. In December 2005, Hallmark Cards sold off Hallmark Entertainment to an investor group led by Robert Halmi Jr., and it was renamed back to RHI Entertainment. On June 17, 2008, the company announced it will begin trading on
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