Businesses face financial difficulties from time to time. But when financial challenges are systematic, whether due to a lack of demand or an overabundance of supply, it may become impossible for the business to remain current on its bills. When this happens, business owners can lose sleep due to overwhelming stress and fear. Yet, as a recent instance highlights, these business owners can seek legal protection and obtain debt relief.
Recently, four companies that operated a nursing home filed for Chapter 7 bankruptcy. The companies received a $3.2 million loan in 2006, but were unable to pay when the loan matured in 2010. Court documents show the companies still owe the bank more than $1.4 million. In addition, one of the companies listed between one and 49 creditors with debt between $1 million and $10 million. The bankruptcy filing also found that company only had between $0 and $50,000 in assets. The property was foreclosed upon and purchased by the bank for $2.1 million.
When a business is struggling with debt it may seem like it will never end, the business will never get ahead, and the business owner is destined to a lifetime of financial hardship. Fortunately, this does not have to be the case. As was done in the nursing home case, filing Chapter 7 for businesses can provide debt relief to those who face overwhelming debt. Under a Chapter 7 filing, also known as liquidation, the business is terminated, assets are sold at auction, and the profits are paid to creditors. Any remaining debt after this process is completed may be eliminated.
Bankruptcy might sound scary to some, but it is a real option for many to escape their troubles and reach a fresh financial start. An Alabama bankruptcy attorney can help clarify the process so the decision whether or not to move forward can be made in confidence. Then, with the attorney's help and advice, the proper steps can be taken in an attempt to reach a favorable outcome.
Source: St. Louis Business Journal, "St. Louis assisted living facility owners file for bankruptcy," Jacob Kirn, Sep. 25, 2013