Filing for bankruptcy is not an easy decision for a California company that has been in business for many years. Some businesses are able to seek Chapter 13 protection, allowing the opportunity to present a plan for keeping the company open. A Chapter 13 petition must still make sense, the idea being to devise a strategy to keep things afloat, while demonstrating how creditors will be repaid the debts already owed. But sometimes the need for debt relief is too great and the expenses too substantial to justify continued operation. In that instance, filing for bankruptcy by a Chapter 7 petition may make more sense.

One of northern California's largest family-owned lumberyards closed its doors in August, having filed a petition for Chapter 7 liquidation. The news saddened many people, even their competitors. The company first opened in 1946 when the grandfather of the current owner came out of the service and said he never wanted to work for someone else again. The business thrived for many years, at one point having more than 200 employees. It was named 2nd Assembly District Small Business of the Year in 2006. Unfortunately, as the housing market went south, so did the lumber business.

District Small Business of the Year in 2006. Unfortunately, as the housing market went south, so did the lumber business.

The Chapter 7 petition lists debts including $5 million to a bank, payroll arrears as well as outstanding federal and state taxes. The matter will now proceed in the bankruptcy court and in time liquidation will be authorized.

While it is not easy to make such a decision, the debt relief gained and peace of mind restored allow an owner the opportunity to live again and enjoy a fresh financial start. In California, an attorney dedicated to helping individuals and companies obtain needed debt relief may offer some solace and help devise a plan to reach a just outcome.

Source: The Redding Record Searchlight, "Moss Lumber files for Chapter 7, shuts doors; company founded in 1946 in Butte County," David Benda, Aug. 10, 2011