Previous posts on this blog have discussed the differences between business bankruptcy and personal bankruptcy, as well as the differences between the various forms of bankruptcy available to individuals seeking out financial legal protections. While some types of bankruptcy allow individuals to keep their assets, others require parties to sell off their possessions in order to satisfy creditors. A recent news story may highlight for New York readers how bankruptcy can lead a business to undergo the process of asset forfeiture.
An out-of-state theater company recently began selling off its costumes, sets and other items of possession in order to fund repayment of its estimated $3 million of debt. The company had been in business for more than 30 years but found itself facing financial challenges that it simply could not endure. After filing for bankruptcy, it is now in the process of selling items to the highest bidders through bankruptcy-sanctioned auctions.
Surrendering possessions can be a difficult process for individuals and businesses alike. Whether items hold intrinsic or actual monetary value, parting with them can sometimes make individuals feel that they will have nothing left when the bankruptcy process is over. While in some cases bankruptcy does leave a person with diminished possessions, the benefits of the process often outweigh the losses one experiences.
As the theater company closes its doors and watches its possessions go to other parties, it will be taking an important step in handling its precarious financial situation. In some cases, businesses simply cannot thrive and must cease to operate in order to stop losing money. Asset forfeiture can be a difficult thing for a business to go through, but it can also provide a failing business with the debt relief it needs to find the stability it deserves.
Source: broadwayworld.com, "San Jose Rep to Auction Off Assets Following Bankruptcy," Aug. 9, 2014