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Common Concerns & Questions About Bankruptcy

Houston bankruptcy causes problems in disaster aftermath

| Mar 6, 2020 | Creditors' Rights |

Loans are an almost inevitable part of getting businesses up and running, although it is tempting to try to keep control of an enterprise. Borrowing is often important when businesses are trying to expand. But this can leave some banks or investors out of luck if a business falls on hard times.

An explosion that destroyed a Houston machine shop had bad effects for the nearby community as well as the business. Two employees died in the blast, which also damaged hundreds of nearby homes. Several were red-tagged, or condemned, due to catastrophic damage to foundations and walls.

Federal investigators determined the explosion was most likely caused by an accidental tank burst after an electrical spark ignited a flammable leak. The company later filed for bankruptcy under Chapter 11 in order to handle the lawsuits filed by homeowners who suffered damage. The company said this was to rearrange their assets for an orderly claim process.

The bankruptcy plan is still under consideration by a bankruptcy judge. One of the major concerns is that the business is rushing the process to keep operating during the process while creditors and victims might have to wait to receive claims or not receive their full entitlement.

Businesses concerned about the effects of a bankruptcy can consult an attorney on how to work through the process and stay intact. An attorney can represent either debtors or creditors during a bankruptcy process and work out the best possible results that helps them get their business affairs in order. Bankruptcy helps people and businesses find order in the chaos.