A Chapter 7 case begins when the debtor filing a petition with the bankruptcy court. Along with the petition, the debtor must 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 must contain the following information:
A list 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
A detailed list of the debtor’s monthly living expenses (food, clothing, shelter, utilities, taxes, transportation, medicine, etc.).
Businesses intending to file Chapter 7 should seek the assistance of a seasoned Athens, GA chapter 7 business bankruptcy attorney as the chapter 7 business bankruptcy process is complex.
In Chapter 7, the company ceases all operations and goes completely out of business. A trustee is appointed to sell the company’s assets and the amount is used to pay off the debt, which can include debts to creditors and investors.
The investors who take the least risk are paid first. Secured creditors take less risk as the credit that they extend is generally backed by collateral, like a mortgage or other assets of the company. They know they will get paid first if the business files for bankruptcy protection.
Bondholders have more chances of recovering their investments unlike stockholders, as bonds represent the debt of the company and the business has agreed to pay bondholders interest and to pay back their principal. Stockholders own the business, and take more risk. They could make larger amounts of money when the company does well, but they could lose money if the company does poorly. The owners are last in line to be repaid if the business closes. Bankruptcy laws decide 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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