Many companies face financial challenges at some point in their existence. Many are able to turn it around, but some are forced to turn to bankruptcy to get out from under mounting debt. There are two types of bankruptcy that a company can file, and one is Chapter 7 bankruptcy.
Chapter 7 allows the debtor to discharge their debt. A recent report indicated that an international trade company is now facing Chapter 7 bankruptcy. Gannon International is being forced into bankruptcy by three creditors who are owed almost $3 million. The Chapter 7 bankruptcy petition was filed on July 9 in bankruptcy court.
The main creditor in the filing is Connell Bros. from San Francisco. This company is a distributer of industrial food ingredients and chemicals. Their claim is for $2.4 million. Another creditor is the former COO Robert Greene. His claim is for nearly $300,000.
In 2011, Greene filed multiple lawsuits against Gannon International businesses. He alleged that the founder of Gannon has been diverting assets for personal use. Gannon has been involved in more than one lawsuit over the past few years, with most involving unpaid bank loans.
One benefit of Chapter 7 bankruptcy is that is puts an automatic stay on all creditor actions. This includes garnishment, foreclosures and repossession. Chapter 7 also allows the business to discharge their debt instead of repaying late fees and interest. Credit card debt and secured loans can be discharged under Chapter 7 bankruptcy. As our readers probably know, Chapter 7 is available for individual consumers as well as companies.
Source: St. Louis Business Journal, "Gannon International forced into bankruptcy," Greta Weiderman, July 12, 2013