Most Tennessee bankruptcies are filed voluntarily, meaning that the person or company in financial trouble is the one who files for bankruptcy. However, sometimes bankruptcy can be filed involuntarily when creditors file for Chapter 7 bankruptcy protection for another company. This situation, mixed in with some complex and difficult elements, recently occurred with a law firm dealing with bankruptcy.
The law firm had shut its doors in December 2013 without letting customers or creditors know. LegalZoom, a law document website, found out and filed for bankruptcy on behalf of the law firm in March. The U.S. Bankruptcy Court is waiting for the law firm to respond before officially filing the bankruptcy.
The firm’s issues began in June 2012 when it merged with a bankruptcy firm from Illinois. It was considered a merger at the time, but it left those on the outside confused. Clients were unsure who to contact with questions. In fact, according to the agreement in place, the bankruptcy firm was allowed to shut down within two years from the merger, so it’s possible that the shutdown has been in the works all that time.
When creditors have done all that they can to collect debt, they may file for involuntary bankruptcy in order to collect what they are owed. Once this petition is filed, the debtor can appeal it within a certain time period. Whether filed voluntarily or involuntarily, those involved in Chapter 7 bankruptcy do have the option of seeking appropriate legal assistance to best determine a plan of action, hopefully leading to a more-stable financial future.
Source: The Wall Street Journal, “Judge Wants Chapter 7 for Jacoby & Meyers Bankruptcy,” Sara Randazzo, May 28, 2014