Small business owners in Colorado understand how crippling it can be to carry large amounts of debt on the books. When businesses have significant debt, it can affect everything from the business's ability to hire more employees, take on new projects or to even remain viable.
Often times, businesses with substantial debts make the difficult decision to file for Chapter 7 bankruptcy. While the decision to file for bankruptcy is never easy, the process of straight bankruptcy not only benefits individuals, but businesses, as well.
As an example of Chapter 7 for businesses, one company recently filed for Chapter 7 after it had between $10 million to $50 million in assets and between $10 and $50 million in debt. The company employed individuals in Colorado, but the bankruptcy will affect operations at that location. The company had well over 200 creditors, according to reports of the company's bankruptcy filing.
Typically, shortly after a bankruptcy petition is filed, the creditors will have an opportunity to meet with and ask questions of the debtor. This includes questions of the debtor's financial affairs and the assets that the debtor may have available. The creditors have an interest in these assets because the assets will be liquidated to pay off all or a portion of the debts owed to the creditors.
Ultimately, each case is different, including the number of creditors and assets that a person has available to pay those creditors. However, the process is fairly similar once a bankruptcy petition is filed, which is designed to streamline the process so that the debtor can obtain a debt discharge and start fresh with his or her finances.
Source: WZZM 13, "Lamar Construction files chapter 7 bankruptcy," Christopher Zoladz, July 11, 2014