Many Tennessee companies may not fully understand their bankruptcy options. For example, they may be under the impression that Chapter 11 and 13 are the only types to choose from. However, companies operating under a sole proprietorship or general partnership have the option to file for Chapter 7 bankruptcy. Audioplex Technology Inc., a manufacturer of multiroom audio devices, is using Chapter 7 to wipe away its overwhelming debt.
On June 11, the New Hampshire based company, owned by a couple, filed for bankruptcy. Due to the small business structure, the couple would be personally held liable for the company's debt, so Chapter 7 was an option. This type of bankruptcy can eliminate most types of personal and business debt.
In all, Audioplex owes creditors $625,000. Two mortgages total $454,000, and there are also $28,000 in lawyer fees and $86,000 in credit card debt. The company has more than $800,000 in assets and will attempt to raise money through asset liquidation. The company has volume controls, wall plates, speaker selectors and IR distribution items valued at $260,000.
Chapter 7 is an attractive option to small companies because it offers a fresh start. No repayment plan is required, unlike a Chapter 13 bankruptcy, which stipulates that the debt must be repaid. Plus, there are no limits to the amount of debt a company or individual can discharge. In addition, with a Chapter 7 bankruptcy, debts are typically discharged in under 90 days. The process happens in a short amount of time, allowing a person to quickly move on and put the situation behind them so they can focus on rebuilding credit.
Source: CEPro, "Audioplex Declares Chapter 7 Bankruptcy," Julie Jacobson, June 16, 2014