Many Colorado businesses start with a simple vision of what the business can bring to customers. Those with novel ideas and motivation can use their know-how to turn the business into a successful venture.
However, even with the best business skills, some businesses have a tough time due to factors completely outside of their control. Issues that plague the economy, or a particular industry, may hit the business hard and cause the business to accumulate vast amounts of debt.
Under these circumstances, the business may find it necessary to file for bankruptcy. For instance, one business that was started to bring farm-grown foods directly to consumers recently had to file for Chapter 7 bankruptcy. The company had assets of $127,000, but debts of $491,600, according to its bankruptcy petition.
Unlike other forms of bankruptcy, under Chapter 7 for businesses, the company will undergo an asset liquidation. A trustee will be appointed to manage the property and pay off creditors after the assets are liquidated.
The length of the case may turn on how many assets the company has left. For instance, if the company does not have any assets, the Chapter 7 case may only take three or four months. On the other hand, if the company still has significant assets, the trustee will need to gather the assets and sell them to distribute the proceeds. In either event, the business will receive a debt discharge at the end of the process, allowing those involved in the venture to start anew.
Source: The Wall Street Journal, "Farms' urban middleman files for Chapter 7," Jacquilne Palank, Jul. 24, 2013