Businesses in Ohio whose debts have become overwhelming may seek the protection offered by the U.S. Bankruptcy Code. Companies with serious debt problems can reorganize their finances while maintaining business operations under Chapter 11 bankruptcy. If the reorganization is not successful, the business owner may explore other options.
A children's museum in another state had the opportunity to restructure its debts and create a repayment plan after its Chapter 11 filing in Nov. 2014. Unfortunately, the non-profit organization's finances didn't allow for the successful maintenance of the repayment plan. The only other option for the business was to file for Chapter 7 bankruptcy.
Although Chapter 7 offers some protection, it is a liquidation process. Assets will either be returned to creditors or liquidated. The funds obtained through the sale of assets will then be used to pay creditors. While individuals can go through Chapter 7 bankruptcy and continue life afterward, this option does not allow business operations to continue, and it will have to close its doors as the existence of the business will cease.
When an Ohio business or individual files for bankruptcy, all further debt collection actions by creditors are stopped. Foreclosure and repossession actions are also put on hold, giving the debtor the opportunity to find a solution to the problem. Being fully informed about the legalities and requirements of the different bankruptcy options will allow a debtor to make informed decisions at this difficult time. An experienced bankruptcy attorney can provide vital support and guidance to individuals seeking a fresh financial start.
Source: waaytv.com, "Sci-Quest files for Chapter 7 Bankruptcy, closing doors permanently", Andy Devine, March 8, 2016