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Bankruptcy May Be Your Option

Owners of hotel file for Chapter 7 bankruptcy

Making the decision to close an Oklahoma business' doors or to file bankruptcy is a very difficult one. It usually comes after having invested substantial time and money into a company that, for some time, has suffered financial hardship due to several circumstances such as the economy, steep competition, and/or lost business.

After closing its doors for the second time due to financial reasons, the limited partnership that owns an iconic hotel in another state has filed for Chapter 7 bankruptcy.

 

The business owes a bank almost $1.8 million in principal, interest, and late fees. It also owes more than $76,000 in back taxes, and more than $50,000 in insurance. The filing came shortly before a foreclosure sale on one the business' liens. The hotel has had several tax liens levied against it since December 2012, totaling more than $600,000. The latest lien is over $140,000.

 

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is underway when the bankruptcy trustee sells a business' non-exempt assets that are free and clear of liens. Proceeds, if any, are then used to satisfy creditors.  

 

A Chapter 7 petition stays most collection actions against the business and its properties. While a stay is in effect, a creditor generally may not start or continue any lawsuits, garnishments, or further acts to collect on the business' debt.  

 

For the hotel, the Chapter 7 filing will stay foreclosure proceedings. But it will also pump the brakes on finding a buyer for the hotel, and will put any possible negotiations with the second lien lender on hold.

 

Bankruptcy makes sense to many businesses that are suffocating under mounting debt and operational uncertainty. However, deciding upon the best debt relief strategy is a decision that should be made after consulting with an experienced Oklahoma business bankruptcy attorney.

Source: KTRE News, "Company that owns Nacogdoches' Hotel Fredonia files for bankruptcy, delays foreclosure sale," Donna McCollum, April 1, 2014

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