Bankruptcy Lawyer Bryan W. Stone answers the question: “What is Chapter 7 Bankruptcy?”
A Chapter 7 bankruptcy that was filed in 2003 has finally ended 15 years later. The Great Northern Paper Co. filed for Chapter 7 bankruptcy in 2003 and Chief Judge Peter Cary of the United States Bankruptcy Court for the District of Maine has ordered that the proceeding be closed within 30 days, according to Bangor Daily News. The trustee submitted a certification that the assets of the estate were accounted for and requested that the court discharge the company from other debts and duties.
Nearly $203 million in assets were abandoned in this case over the past 15 years. Additionally, $15.5 million was distributed to claimants in the case, while $302.8 million worth of debts was discharged.
In Chapter 7 bankruptcy, unsecured creditors are usually unlikely to receive any payment from their debt claims. Unsecured creditors are those to whom the debtor owes money, but the debt is not secured in any physical property. In the Great Northern Paper Company bankruptcy, there were many former employees who filed claims for past wages, pensions, vacation pay, and severance pay that they were owed at the time the company went out of business. Even though they are unsecured creditors to the case, the former workers of the company’s mills will be paid a “small fraction” of wages, pensions, vacation pay, and severance pay that was owed to them.
Basics of Chapter 7 Bankruptcy
Bankruptcy can often be a strategic business move for companies that need to restructure their business, or in the case of Chapter 7 bankruptcies, discharge debt that they are unable to pay completely.
According to the United States Bankruptcy Code, individuals, partnerships, corporations, and other business entities are all able to file for Chapter 7 bankruptcy. Bankruptcy begins by the debtor compiling all of their debts into a petition that gets filed with the court. From there, a United States Trustee is assigned to the case to oversee the discharge of debts and handle any assets that need to be distributed. The filing of a bankruptcy petition puts an automatic stay on the debtor’s debts. This means that the debtor cannot be harassed by creditors that are owed money and are named in the bankruptcy for the duration of the bankruptcy proceedings. The Trustee will conduct a hearing and determine if there are assets that can be liquidized or used to pay off some or all of the debtor’s debt. In the event that there are assets, the Trustee is responsible for coming up with the plan for how to distribute the value of the assets among the creditors.
If there are no assets to be used to pay creditors, the Trustee can grant a discharge for the debtor, and the debts will be forgiven. If there are assets, the case will take longer to resolve. The court must approve all plans, whether immediate discharge or asset distribution.
Need Bankruptcy Help?
At the conclusion of the bankruptcy proceeding, creditors will have been paid some or all of the debts owed and the rest of the debts are discharged. If you are considering filing bankruptcy, it can seem like an insurmountable task. Fortunately, you do not have to navigate the complex legal process alone. The attorneys at Arnold & Smith, PLLC are here to help you. We will work hard to make this difficult time easier for you. Contact us today for a consultation.
If you have questions regarding student loan debt and your potential bankruptcy, you need to consult with a skilled bankruptcy attorney. The experienced attorneys as Arnold & Smith, PLLC will answer all of your questions and help you begin on the path to a better financial future. If you are contemplating bankruptcy in the Charlotte, Lake Norman or Monroe area, please call the skilled lawyers at Arnold & Smith, PLLC at 704-370-2828 or find additional resources here.
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