OpenGate Capital LLC recently announced that a company included in its portfolio, Golden Guernsey Dairy, LLC, with distribution ties to Illinois, has filed for bankruptcy. The Chapter 7 filing will officially liquidate a plant in a neighboring state that abruptly closed recently. The plant manufactured, bottled and distributed dairy products to grocery and convenience stores, major retailers and schools in Illinois and other states in the Great Lakes region. OpenGate Capital blamed the plant’s closure on an inability to reduce costs. The dairy’s Chapter 7 filing lists more than 200 creditors and $10 to $50 million in both liabilities and assets. After acquiring the dairy, OpenGate had planned to increase sales by 20%, but because of “legacy” relationships, claims that it was unable to obtain cooperation to reduce costs.
Under Chapter 7 bankruptcy, all non-exempt assets must be liquidated to pay outstanding debts. For individuals and companies alike struggling with debt, Chapter 7 bankruptcy can offer debt relief. Chapter 7 filers can eliminate most of their debt and receive a fresh financial start. The party seeking Chapter 7 debt relief as a solution to overwhelming debt must first file a petition with the bankruptcy court. Following this, a schedule of assets and liabilities, current income and expenses, a statement of finances and schedule of contracts and lease obligations must be provided to the bankruptcy court.
Detailed descriptions of the information listed above also must be provided to the bankruptcy court, as well as tax income. Individuals filing for Chapter 7 bankruptcy are required to provide some types of additional information. Following the filing, a temporary stay will be put in place preventing creditors from pursuing collection actions during the bankruptcy proceeding. This can come as a relief to Chapter 7 filers. Some actions listed in the Bankruptcy Code, however, are not subject to the stay and the stay can last for a short period of time in some situations. While it is in effect, creditors will generally not be permitted to begin or continue lawsuits and will have to stop wage garnishments or collection telephone calls.
Both businesses and individuals seeking a fresh financial start may benefit from Chapter 7 bankruptcy. It is important for prospective filers to understand what to expect from the process.
Source: The Business Journal, “Golden Guernsey Dairy files Chapter 7 bankruptcy,” Jeff Engel, Jan. 9, 2013
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Dairy decides to file for Chapter 7 bankruptcy relief