Posted by: Lawyer Sanders | February 17, 2009

Environmental Lawyer Sanders says Peanut Corporation of America cowardly files for bankruptcy under Chapter 7 leaving another mess behind for both workers and food poisoning victims.

The Peanut Corporation of America has filed for Chapter 7 bankruptcy, a month after peanut products from its Blakely, Georgia facility were first recalled due to salmonella contamination. In its bankruptcy petition, the company estimated its assets to be worth between $1m to $10m, and its liabilities to be in the same range at the US Bankruptcy Court in the Western District of Virginia on February 12, 2009.

 

When a troubled business is badly in debt and unable to service that debt or pay its creditors, it may file (or be forced by its creditors to file) for bankruptcy in a federal court under Chapter 7.  A Chapter 7 filing means that the business ceases operations unless continued by the Chapter 7 Trustee.  A Chapter 7 Trustee is appointed almost immediately. The Trustee generally sells all the assets and distributes the proceeds to the creditors.

 

In a Chapter 7 case, a corporation or partnership does not receive a bankruptcy discharge—instead, the entity is dissolved. Only an individual can receive a Chapter 7 discharge (see 11 U.S.C. § 727(a)(1)). Once all assets of the corporate or partnership debtor have been fully administered, the case is closed. The debts of the corporation or partnership theoretically continue to exist until applicable statutory periods of limitations expire.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: