A Chapter 7 proceeding starts when the debtor filing a petition with the bankruptcy court. In addition to 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:
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
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 Richmond County, Georgia chapter 7 business bankruptcy attorney because the chapter 7 business bankruptcy process is complex.
In Chapter 7, the company stops its operations and exits the business completely. 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 investors who take the least risk are paid first. Secured creditors take less risk because the credit that they give is usually supported by collateral, like a mortgage or other assets of the business. They realize they will be paid first if the business declares bankruptcy.
Bondholders have greater chances of getting back their investments than stockholders, as bonds are the debt of the business and the business has accepted to pay bondholders interest and to pay back their principal. Stockholders own the company, and take greater risk. They could make more money if the company does well, but they can lose money if the business does badly. The owners are last in line to be repaid if the business fails. Bankruptcy laws determine the order of payment.
———————We are Augusta GA bankruptcy lawyer | Georgia attorney that assist their clients in filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy in Augusta GA.
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