Most business owners in Pennsylvania have dreams of selling plenty of merchandise in order to stay in the black. However, circumstances beyond their control, such as a downturn in the market or other financial problems, could result in them seeking Chapter 7 bankruptcy protection. A furniture business in one out-of-state case is in the process of liquidating its assets under the supervision of a Bankruptcy Court after filing for relief.
The company filed for bankruptcy after representing that its debt was somewhere between $500,000 and $1 million. As part of the bankruptcy process and with the approval of the court, the business hired a management firm to sell its merchandise as part of the bankruptcy process. It plans to sell the furniture it has available both on its main floor, as well as in its warehouse facilities, so the sale could last one to two months. All items have to go.
All items are marked down by 50 to 70 percent as part of the liquidation sale. The bankruptcy trustee said that this liquidation method appeared to be the most effective way to settle the proceedings. After the assets are reduced to cash, the trustee will supervise payment of the net funds to existing creditors of the company. The business also has customers who have not received the products they’ve already purchased from the company. Moreover, the furniture company owes a significant amount to the Internal Revenue Service.
In a Chapter 7 bankruptcy in Pennsylvania, a business must complete and file a petition, and a trustee is appointed to accumulate the business’ assets. Next, the assets are liquidated for the benefit of the company’s creditors. The creditors are paid under the supervision of the court, although the amount paid might be significantly less than what is owed. Finally, the business’ remaining unsecured debts are formally discharged. This type of bankruptcy filing is a helpful way for a business owner to responsibly confront debt that has become unmanageable and embrace other business opportunities.
Source: mlive.com, "Bankruptcy sale for Ann Arbor's Naked Furniture now expected to last 'a month or two'", Jeremy Allen, May 11, 2014