Hot Yoga Files Bankruptcy

That’s right – the company that brought hot yoga to the U.S. files for Chapter 11 Bankruptcy after the founder’s sexual harassment scandals cost the company millions.

Chapter 11 Bankruptcy Due to Chapter 13 Debt Limits

Chapter 11 Bankruptcy applies to business entities like corporations. Chapter 11 Bankruptcy can enable a corporate debtor to reorganize its debt.  Chapter 11 Bankruptcy is also an option for individuals with so much debt that they are barred from filing Chapter 13 Bankruptcy.  Chapter 13 Bankruptcy contains “debt limits”.  One may not have more than $394,725.00 in unsecured debt and $1,184,200.00 in secured debt to qualify for a Chapter 13 Bankruptcy.

Bankruptcy May Not Save Hot Yoga

Bikram Choudhury Yoga Inc. listed over $16,000,000.00 in debt.  Much of that debt resulted from lawsuits that contained allegations of sexual abuse or assault.  The Bankruptcy Code states that some forms of debt are generally nondischargeable.  Debts like child support, alimony, and student loans are usually nondischargeable.  However, the Bankruptcy Code also contains a provision that states that a debt may be nondischargeable if they result from “willful and malicious injury by the debtor to another entity or to the property of another entity”.

Other Examples of “Willful and Malicious Injury”

Bankruptcy Courts have established numerous examples of what constitutes a “willful and malicious injury”.  Notably, one case involved an instance where the Debtor broke the creditor’s arm and then bit part of his finger off.  Other Courts have found that defamation may constitute “willful and malicious injury”.  However, the most common instances of “willful and malicious injury” usually also involve allegations of fraud.  The Bankruptcy Code separately lists “fraud” as a basis for nondischargeability.  This means that the creditor two separate avenues to obtain a ruling of nondischargeability.

Is My Debt Able to Be Discharged in Bankruptcy?

Naturally, if you are concerned about a specific debt, you need to seek answers.  Contact The Law Offices of Dax J. Miller, LLC to learn more about which debts you can eliminate and which ones you can’t.