Part of the bankruptcy court process with which I have been dealing for the past twenty-plus years involves auctions. People usually associate auctions with estates, but often a bankruptcy trustee will convert assets into cash to pay creditors by holding an auction. Two local companies have assets put up for auction within past weeks. The first, ATA Airlines, closed back in April (seeATA Bankruptcy Plan Blown To Bits), but it took until a couple of weeks ago to wind up the loose ends in the company’s headquarters. Hundreds of ATA items are being auctioned off to the public here in Indianapolis at the headquarters on the west side of the city, but also in ATA’s former Chicago office, all under order of the U.S. Bankruptcy Court. The items include office furniture and equipment, but also specialty aviation equipment.
More recently, Premier Properties, the retail development company that owned the Metropolis mall in Plainfield, changed their plan to reorganize into a liquidation bankruptcy. In this case, the auction will be held at the Hamilton County Fairgrounds. The Premier auction will include assets of the business owner, such as scooters, electronic theater equipment, and exercise equipment.
As a bankruptcy attorney in Indiana for more than two decades, I’ve seen many different situations in which business assets are liquidated to satisfy debts. As I explained in Yes, Your Business Can File Bankruptcy Without You, unlike personal bankruptcy, in which certain debts may be discharged (meaning legally forgiven in part or in full), the law does not provide for a business’ debts to be discharged. All available assets must go towards repaying the creditors of the business. With ATA, a publicly held corporation, the personal assets of business owners (in this case the shareholders) are not involved. In the case of Premier Properties, where there was one principal owner, (developer Christopher White), the owner’s assets may be involved as well.
The overriding principles behind the bankruptcy system are to provide a safety net that encourages entrepreneurs to take business risks and keep the economy moving, while at the same time fairly protecting the creditors who themselves took risks by lending money to those businesses.
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg