Question

Asked Feb 4, 2019

What are possible reasons for a company with $20 million worth of assets that files for chapter 7 bankruptcy and a secured creditor with claims of over $100 million and the building as a secuirty end up with nothing?

Step 1

A secured creditor will invoke the security and take home the proceeds from the sale of seurity. Reasons why a secured creditor may not get paid anything under chapter 7 bankruptcy filing is:

- The value of the building has fallen down to zero
- There is no buyer for the property
- In case, the secured creditor isnot having the first charge and the proceeds from the sale of the property is just adequate or inadequate to service the first chsrge holder
- The building or the property's title is not clear
- There are title issues and or litigations going on the property / building available with the secured creditor a security

Step 2

Some more reasons can be:

- The secured creditor is not able to prove its mortgage or encumbrance on the property.
- The ass...

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