Rapid P&P LLC hopes to save money and be out of bankruptcy reorganization quicker by using a bankruptcy procedure that went into effect in February 2020.
The Bentonville packing company filed for Chapter 11 bankruptcy reorganization under the Small Business Reorganization Act.
“It’s designed to be effective and affordable, because there’s just fewer moving parts, and it moves along so swiftly,” said attorney Stanley Bond of Fayetteville, who handles bankruptcy cases and is representing Rapid P&P, which operates as Rapid Prototypes.
Under the standard Chapter 11 reorganization, companies had a difficult time emerging from bankruptcy because of all the filing requirements and extra fees associated with it.
But by using the SBRA, “it allows moms and pops in businesses to reorganize their affairs quickly and less expensively than the standard Chapter 11 reorganization process,” Bond said.
Under the SBRA, the debtor has exclusive rights to file a plan for reorganization, but the debtor has to do it within the first 90 days.
And the debtor doesn’t have to file disclosure statements for its reorganization plan, “so that’s a tremendous savings in time, energy and effort,” Bond said.
Bond said that most debtors’ plans of reorganization under the SBRA are confirmed within the first 180 days. “There’s a trustee appointed who is sort of a mediator who tries to get everyone to agree to compromise,” Bond said. “It’s still a baby law, but it’s working.”
The speed with which a debtor could move through bankruptcy could save a company at least 10% in bankruptcy-related fees, making it more likely that the company will emerge from bankruptcy, he said.
When the SBRA was enacted, debt couldn’t exceed $2.7 million, but the limit has since been temporarily increased to $7.5 million. That amount sunsets in June 2024 and returns to the statutory amount, which would be adjusted for inflation.
But the higher amount might remain in place, Bond said. “It has become so popular that even Congress might get its act together enough to make the $7.5 million permanent, because it appears to be working,” he said.
When Rapid P&P filed for bankruptcy reorganization on June 30, it listed debts of $6.4 million and total assets of $3.1 million.
One of Rapid’s creditors, Berkley Industries LLC of Lowell, filed a motion last month for Rapid’s bankruptcy to be dismissed or that its case be converted to the standard Chapter 11. Berkley alleged in its motion that Rapid has several leases and if the debt is considered under the leases, Rapid’s debts total $9 million, making it unqualified for the SBRA.
Bond said the company will oppose the motion.
Rapid filed for bankruptcy because it “incurred pandemic-era debt to keep going and operations have not reached prior levels,” Bond said.
The company, owned by Kelly Jack and Kyle Jack, both of Rogers, reported gross revenue of $5.8 million in 2021 and $7.6 million in 2022. In the first half of 2023, Rapid reported $2 million in gross revenue.
Bond said the company filed for bankruptcy protection because it needed some relief so it could “get on a solid footing and move on with business.”
Rapid’s services include producing packaging for retail companies with new products.
Before 2003, suppliers in northwest Arkansas didn’t have a way “to quickly and efficiently produce packaging and display samples for presentation to Wal-Mart buyers,” Rapid said on its website. “With nothing more than a printer, a cutting table, and a dream of what could be, Rapid was born to meet these growing needs of suppliers.”
Bond said that Rapid is stable as it moves through bankruptcy. Rapid “continues to receive orders and produce work for clients, old and new,” Bond said. “So they’re in business.”
