The California Bankruptcy Forum is hosting its 36th annual insolvency conference in May and Grobstein Teeple will again be an active participant.

The firm has been a major supporter of the California Bankruptcy Forum for many years and has long taken part in the conference’s diverse range of educational and social activities. 

With insolvencies on the rise amid tightening economic conditions, we’re keen to hear some of the insights shared around this year’s conference theme: ‘navigating the wave’.

And as Grobstein Teeple’s co-founder and chief executive Josh Teeple explains, we’re looking forward to hosting our exclusive annual dinner to celebrate our friends and colleagues the night before the conference gets under way.

“The dinner is the biggest annual social event we do,” Teeple explained.

“Each year we invite between 100 and 150 guests for what is a high-end, invitation-only dinner on the Thursday night before the conference starts.  

“There are opportunities for our guests to network, make new friends, and reinforce old relationships.

“We always host it at a really nice restaurant and we bring in exceptionally high-end wines.

“We’re actually renowned for our wine-tasting table—all our guests love trying wines they wouldn’t normally get to enjoy.”

The event gives Grobstein Teeple the chance to thank its loyal referral base and kick-start the conference on a positive note—along with a handful of exclusive wines.

“They’re mostly Californian wines,” Teeple laughed. 

“Maybe with a few Italian reds and French whites thrown in!”

Navigating The Wave of Californian Insolvencies

While California’s economy was estimated to be worth around $3.89 trillion in 2023—making it the largest of all 50 states and contributing up to 14 percent of the nation’s GDP—it’s been impossible to miss the signs of an economic slowdown.

No less than 95 Californian companies sought bankruptcy protection in 2023—more than any other state—and while it’s kept restructuring and insolvency experts like the team at Grobstein Teeple and partner investment banking firm Covitus Capital busy, it’s also a stark reminder of the current economic climate.

“We had a lot of government bailouts during the COVID-19 pandemic that saved some companies that might otherwise have gone under,” Teeple said.

“But those safety nets aren’t around anymore.”

Acknowledging that bankruptcy filings are on an upward trajectory, Teeple says the firm has completed a number of recent Chapter 11 reorganizations.

“We’ve done a number of Chapter 11 bankruptcy reorganizations over the past several months.

“Chapter 7 filings are when the business simply shuts down completely, so it’s nice to be able to help shepherd a company through a successful reorganization and not have to watch them close the doors entirely.”

Knowing When to Call in the Experts

Teeple admits it can be hard for businesses experiencing financial difficulties to know when to seek expert advice—particularly around bankruptcy proceedings.

“It’s a bit counterintuitive, but Chapter 11 bankruptcies are expensive to do well,” he said.

“You actually need financing, or a cash stockpile, in order to file Chapter 11 and have a decent chance of successfully keeping the company afloat and ultimately turning it around.”

For businesses on the brink, Teeple recommends seeking expert bankruptcy advice much sooner rather than later.

“If we’re going to be engaged by the debtor or future debtor—or in other words, the company that files for bankruptcy—you’d want us to get involved as early as possible, ideally concurrently with hiring bankruptcy counsel,” he said.

“That allows our restructuring experts to take a look at the overall financials of the company and make a plan or provide projections to see if the business can afford to file for bankruptcy and hopefully one day turn things around.”

The Rise of Sub-Chapter V Bankruptcies

Recognizing the high cost of Chapter 11 bankruptcy proceedings for small businesses, Congress enacted the Small Business Reorganization Act (the “Act”) in February 2020.

Essentially, what the Act set out to do was provide a faster and less expensive way for businesses to reorganize under Chapter 11.

It’s a move that has become increasingly popular, including in California.

“The new Sub-Chapter V bankruptcy option is actually a sub-chapter of Chapter 11 of the United States Code,” Teeple explained.

“It’s a less expensive process than filing for Chapter 11.

“You still need to be making money, and you still need to have a plan to reorganize.

“But those Sub-Chapter V filings are getting more popular because it is a less expensive process than going through a full Chapter 11 bankruptcy and has more of a definitive timeline to completion.”

While the impacts of a post-COVID financial landscape are starting to be felt across California, Teeple says it’s another trend that’s having an impact on the state’s bankruptcy proceedings.

“We’re seeing a lot more businesses headquartered in California—but incorporated in states like Delaware, New York, or even Texas—filing for bankruptcy in those other states.

“Even though these businesses may not actually conduct any business in those states, they’re filing for bankruptcy there because they believe they’ll get a better outcome.

“So, there’s currently a lot of talk around reforming certain bankruptcy laws to ensure that businesses have to file for bankruptcy in the state they’re actually headquartered in or do the most business.”

Bankruptcy Experts You Can Trust

While Grobstein Teeple has been a trusted part of the Californian bankruptcy landscape since 2013, it’s the fact that the firm’s partners have decades of combined experience between them that keeps clients seeking their assistance.

It means those seeking expert advice on bankruptcy proceedings can get the help they need when they most need it.

“One of the most common things I see when it comes to bankruptcy proceedings is businesses that fail to leave themselves enough runway,” Teeple said.

“They don’t have enough operating capital to get them through, or they fail to make the hard decisions around payroll cuts or closing down a location, and they end up desperate and burying their heads in the sand.”

A more practical solution is simply to seek out expert advice before it’s too late.

“If you’ve chewed up all your runway and you can’t even file for Chapter 11 anymore, a Chapter 7 liquidation might be the only remaining option.

“I try to be really empathetic to business owners and connect with them on an emotional level around things like that—because for a lot of people, this is their entire life we’re talking about.”

The California Bankruptcy Forum takes place in Santa Barbara from May 16-19.

If you’re in need of some expert bankruptcy advice, simply get in touch to book a call.