Recently, a Maryland company that made sensors and other products that are meant to detect miniscule amounts of toxic substances filed for Chapter 7 bankruptcy in a Baltimore court. Reportedly, the company's liabilities amounted to $89.5 million and no assets. The company manufactured such products as paintballs designed to prevent counterfeiting and smuggling; screening wipes and sprays; and products to detect types of pathogens acquired in hospitals.

Other shareholder claims listed in the company's petition include $1.7 million by a company in California; $8.65 million by a company out of New York; and $490,000 by a communications company in Reisterstown. The petition was said to have listed from 200 to 999 creditors, including the company's former CEO, whose share was reported to be $16.5 million.

As Maryland residents know, Chapter 7 bankruptcy effectively liquidates a bankrupt business. By contrast, companies file Chapter 11 bankruptcy in order to protect the company's assets from creditors while finances are reorganized. For the majority of Maryland business faced with financial difficulties, Chapter 7 bankruptcy may be the best option.

According to federal statistics, nearly 500 such bankruptcies were filed in Maryland within the year-long span ending on Sept. 30, while 150 Chapter 11 filings were recorded in Maryland within that same period. The numbers represent a 17 percent decrease in Chapter 7 cases and a 34 percent decrease in Chapter 11 cases over a year.

If business owners in Annapolis and the surrounding areas are concerned about debt, consulting with a legal professional who specializes in bankruptcy law may be an eye-opening decision. Business and commercial bankruptcy can be a complex process that is best negotiated with the help of individuals who know how to customize a bankruptcy to fit the specific needs of a business.

Source: gazette.net, "$89.5M in arrears, Columbia company folds," Kevin James Shay, Dec. 19, 2011