If I buy a product from a company that has closed where (or for who) does this money of the sale go?
In: Economics
Unfortunately I’ve had to help a company navigate through a bankruptcy proceeding. The big thing to consider is if they are filing a Chapter 7 (total shutdown) or Chapter 11 (restructuring debt).
You have to file A LOT of paperwork with the courts explaining all assets and liabilities of the company itself and it’s owners (depending on structure of the entity). Afterward, you keep submitting monthly operating reports showing your income as you try to settle the debts.
A bankruptcy lawyer will send out notices to all creditors, and then the creditor has to submit a claim to the court proving they are owed the debt. Then a payment plan (liquidating assets, staying open, etc.) is negotiated in court, and then the creditors get to vote on the plan. If approved, a company can stay open and continue operating with restructured debt they payout over seven years usually. If not, the creditors can force a Chapter 7 bankruptcy, forcing the sale of all assets and the court then decides who gets how much money.
It’s a pretty complex process, and ironically an EXPENSIVE one at that.
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