A Chapter 7 proceeding begins with the debtor filing a petition with the bankruptcy court. In addition to the petition, the debtor should also file with the court several schedules of assets and liabilities, details of current income and expenditures, a statement of financial affairs, and details of executory contracts and unexpired leases. The schedules and statements include the following information:
Details of of all creditors and the amount and nature of their claims;
The source, amount, and frequency of the debtor’s income;
Details of of all of the debtor’s property; and
Details of of the debtor’s monthly living expenses (food, clothing, shelter, utilities, taxes, transportation, medicine, etc.).
Businesses intending to file Chapter 7 must seek the help of a seasoned Athens-Clarke County, Georgia chapter 7 business bankruptcy attorney since the chapter 7 business bankruptcy process is complicated.
Under Chapter 7, the business stops all operations and goes completely out of business. A trustee is appointed to liquidate the business’s assets and the money is used to pay off the debt, which may include debts to creditors and investors.
The first to be paid are the investors who take the least risk. Secured creditors take less risk due to the fact that the credit that they give is generally backed by collateral, like a mortgage or other assets of the business. They know they will get paid first if the business declares bankruptcy.
Bondholders have greater chances for getting back their investments unlike stockholders, as bonds represent the debt of the business and the company has agreed to pay bondholders interest and to pay back their principal. Stockholders own the company, and take greater risk. They can make more money if the business does well, but they can lose money if the business does poorly. The owners are the last to be repaid if the business closes. Bankruptcy rules determine the order of payment.
———————Athens Georgia bankruptcy lawyer | Bankruptcy attorneys in Athens GA and Athens-Clarke County – Filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy
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