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Tech founder's bankruptcy dismissed after failure to follow rules

Colorado residents are used to following rules. Whether it is obeying traffic rules, or following work policies, it seems like rules are everywhere, along with the consequences for breaking the rules.

The same is true in the legal system, as litigants must follow the proper procedure when they are filing documents before the court. If they do not follow these requirements, they may suffer consequences, including dismissal of their case.

For example, a man who founded tech website CNET recently filed for Chapter 7 bankruptcy, listing assets of almost $50 million and debt of $100 million. However, the man's Chapter 7 case was dismissed because he failed to file schedules, statements, and/or a plan, as he was required to do in his filing. The man has indicated he will attempt to have his case reinstated, despite the dismissal.

While the dismissal may surprise some, it is a requirement when filing for Chapter 7 that debtors file with the court a schedule of assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs and a schedule of executory contracts and unexpired leases. Other documents, like tax returns, must also be provided to the trustee in the case, so the trustee can fulfill his or her responsibilities.

Ultimately, the requirements for a bankruptcy petition are like the rules in any area of life, as debtors must comply with the rules or risk suffering consequences. In order to ensure individuals comply with all the requirements, it is often necessary to work with a qualified bankruptcy attorney.

Source: Bloomberg, "CNET founder's bankruptcy thrown out over missed deadline," Erik Larson & Dawn McCarty, June 13, 2013

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