Most of our Escondido readers know that the bankruptcy process can be different for individuals and businesses. Many businesses will try to go through the Chapter 11 bankruptcy process, which allows the company to attempt to reorganize the business and consolidate debt in an effort to remain in operation for the long term. Individuals, on the other hand, often prefer the Chapter 7 bankruptcy process, which allows a debt holder to liquidate their assets in an attempt to pay off creditors. Any debt remaining after this process is complete is usually discharged. However, what many people may not realize is that Chapter 7 is also available to businesses. But, the unfortunate reality is that when a business files for Chapter 7 that is usually the end of the enterprise.
That seems to be the case for one Southern California business. According to reports, the homebuilding entity Bischoff Properties, Inc., recently filed for Chapter 7 bankruptcy. The bankruptcy was coupled with the owner, Paul Bischoff's, personal bankruptcy. Bischoff is reportedly the sole owner of the homebuilding business.
It is apparent from the numbers in the Chapter 7 filing that the business was indeed facing a dire financial situation. The reports indicate that the business listed $1.1 million in liabilities to just $3,100 in assets.
A few years ago, during the worst of the economic downturn and the bottoming-out of the housing market, it was not uncommon at all to see homebuilding companies filing for bankruptcy left and right. However, with the national housing market on the upswing, it is somewhat surprising that a homebuilder can't find enough room to make some headway. But, while certain areas of the country are seeing surging housing markets, there are other areas where the recovery just isn't keeping pace. When a company's market can't supply the demand for services, Chapter 7 is often the last option in the business plan.
Source: The Tribune, "Grover Beach home builder files for Chapter 7 bankruptcy," Julia Hickey, Aug. 28, 2013