When a company is facing tough economic times, there are many decisions to be made and discussions to be had on how to bounce back. Many times, a company is able to make a few changes and add a few cost saving measures to get back on track. But in some cases, the company is unable to see a way out from under a crushing debt burden and must file for Chapter 7 bankruptcy.
For a business there are two main types of bankruptcy: Chapter 7 and Chapter 11. Chapter 7 is a liquidation of assets to fulfill debts and obligations. This will generally close down a business. In Chapter 11, the courts allow the debtor to come up with a reorganization plan to pay back debts.
Many of our Sacramento readers may know that Hostess had to file for Chapter 7 bankruptcy in November, forcing the company to close all of its Waterloo, Iowa plants. The bankruptcy administrator has set a deadline of June 12 for offers on the Waterloo buildings that are left. A Georgia company bought up a bakery and depot in March when it purchased Wonder Bread. There are 61 properties around the nation that still need to be sold.
The real estate company that was put in charge of the sale of all the properties is currently gathering the necessary information that potential buyers need to complete due diligence on the properties. The company that bought the other two buildings passed up on the other Hostess buildings in the area that are now currently for sale.
Chapter 7 bankruptcy allows a business or individual to eliminate their debt. Filing for Chapter 7 also gives the business or individual an automatic stay on all collection actions by creditors. This includes stopping foreclosures and repossessions.
Source: Cedar Valley Business, "Firm sets June 12 deadline to take offers on two ex-Hostess properties," Jim Offner, April 4, 2013