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Drought, hail, and recall forces farmer's Chapter 7 bankruptcy

Many times circumstances outside of the control of a business owner may cause the business to fall on hard economic times. Often it is farmers who feel the brunt of an economic downturn, such as the recent recession which affected all parts of the country, including Texas. One farmer experienced this when his farming business recently filed for Chapter 7 bankruptcy. Apparently, damage from hailstorms and drought along with a spinach recall forced the company to petition for bankruptcy.

The farm focused on providing organic foods before hard economic times forced the business to close down its operations. The farm's owner is now trying to decide how to proceed. He adamantly insists that he does not plan to leave the farming business, citing that his family had been involved in farming for 61 years. The farm's closing resulted in more than 50 individuals being laid off from their jobs at the farm.

The farm filed its petition in late December and reported assets worth anywhere from $500,001 to $1 million. The business also stated liabilities ranging from $1 million to $10 million. Additionally, the business has anywhere from 200 to 999 creditors, according to the bankruptcy petition submitted to the court. The farm had previously filed Chapter 11 bankruptcy in 2006 and 2007. A comparison of the past bankruptcy filings with the current filings reveals that the farm's value has decreased while its debts stayed the same.

There is a meeting of the creditors set for mid-January in the current Chapter 7 bankruptcy case. In this type of bankruptcy, all of the business assets are liquidated in order to repay creditors. This allows the business owner to discharge many of the business debts; however, it will also require the business to cease operations. This can also enable a business owner in Texas or elsewhere to move onto the next business venture.

Source: Coloradoan, "Grant Family Farms closes, files for bankruptcy," David Young, Jan. 5, 2013

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