Chapter 7 may offer fresh start for struggling businesses

Recently, Chicago’s WGN-AM 720’s vice president and general manager announced his resignation. The announcement comes as the news-talk radio station’s parent company is coming out of their debt problems. Amidst speculation that the company wanted to eliminate the vice president’s salary for a potential sale, the radio station’s parent company, Tribune Co., is moving forward from their bankruptcy difficulties. The company faces cutbacks, including managerial, as it will now be under control of creditors. It is expected that the print and broadcast pieces of the company will be sold separately, as the latter is more financially stable.

Although the news company finds itself under the control of creditors, many struggling companies can avoid that fate through Chapter 7 bankruptcy. Chapter 7 for businesses can provide critical relief to a company struggling with debt. A company seeking a Chapter 11 business reorganization bankruptcy could discuss filing options regarding 7 if the conversion would be advantageous.

After filing for Chapter 7, what is called an automatic stay is put into effect which prevents creditors from pursuing collection of any debts. Under a Chapter 7 bankruptcy, a bankruptcy trustee is appointed who will meet with creditors. The trustee will gather assets, based on information provided by the debtor under oath, sell them and distribute the proceeds to the creditors. All financial records and documents requested by the trustee must be provided to them.

In tough financial times, companies across Illinois may find themselves under stress from creditors. Chapter 7 bankruptcy may provide the debt relief necessary to enjoy a fresh financial start.

Source: Chicago Sun-Times, “WGN-AM chief Langmyer leaves abruptly,” David Roeder, Oct. 23, 2012.

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Chapter 7 may offer fresh start for struggling businesses