Many Colorado businesses struggle to survive when faced with high debt and decreased revenues. These businesses do their best to stay alive, and employ the workers who depend on the business's survival.
Despite their best efforts, some businesses are unable to stay in the black. Often times, this is through no fault of the business, as external market conditions and the economy can impact the business's bottom line. For these businesses, it may be necessary to file for Chapter 7 bankruptcy.
Recently, for example, a 61-year-old farming operation filed for Chapter 7 bankruptcy, due to crop damage and financial hardships. Grant Family Farms, an organic Community Supported Agriculture, or CSA, closed its business and laid off more than 50 employees.
The farm cited financial struggles dating back several years, as well as crop damage caused by hail storms and drought. The bankruptcy filing showed the farm's assets listed between $500,001 and $1million, with liabilities between $1 million and $10 million.
While many businesses file for bankruptcy under a different chapter, some may not realize the availability of Chapter 7 for businesses. Indeed, the procedure and rules differ according to the specific type of bankruptcy a business seeks.
In Chapter 7, a trustee is appointed and will ask the company questions to ascertain its assets and liabilities. At the "341 meeting," also known as the first meeting of creditors, the creditors may also inquire into the company's financial condition. For example, in the farm's case above, the company shut down operations, and the assets will now be liquidated to settle the farm's debts.
Source: Coloradoan, "Grant Family Farms closes, files for bankruptcy," David Young, Jan. 5, 2013