The next day, the bank called. “Mr. Barnacle, the Internal Revenue Service has levied on your bank account, so we are going to be dishonoring all checks that come in after today.” Ben picked up the phone and called the agent and got a recording that the agent was out of the office. “Probably to levy on my money”, sputtered Ben. Ben then picked up the telephone and called his lawyer. Barney Scrupples. “Barney, I need your help, the IRS is levying on my assets, they say we owe employment taxes, and at this point, I’m sure that we probably owe sales taxes, income taxes, county taxes, and who knows what else.” “Calm down, Ben, can you come to my office this afternoon?” “Yes”, said Ben. “Bring a list of your creditors, you know the people you owe money to, with you”, Barney replied.

That afternoon, Ben met with Barney and he suggested that Ben speak with his Chapter 11 Bankruptcy partner, Bob Ramino. Bob explained to Ben what to expect in Chapter 11 and that it doesn’t make debts go away, but buys you time to move forward with your business while you try and come up with a plan to work out your debts. Sooner or later the IRS would have to be paid out of the business, just not that day. Ben gave the attorney a list of creditors and the cash he had in the register at the business to cover the retainer and some of his own money as well.

Later that afternoon, Cakes, Inc. was officially in Chapter 11 with still running the business. The lawyer sent a copy of the filing as a matter of course to Mr. Sorbe at the IRS as well as to the District Director and to the bank. Now, Cakes could operate without hassles as long as it followed the rules and Ben sat down with an accountant to be sure he stayed current in the future on his employment tax filings.