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Creditors push for involuntary bankruptcy of defunct company

In many ways, companies are just like individual people when it comes to debt and finances. If a company in Texas or elsewhere owes money to creditors, it is obligated to repay money borrowed. A group of hedge funds led by SPQR Capital is currently arguing in a bankruptcy proceeding that a business which once existed, but is no longer in existence, is still obligated to repay debts owed to creditors.

SPQR Capital has recently filed a petition asking a bankruptcy judge to deny a petition by a financing vehicle of TPG Capital. The petition filed by the arm of TPG Capital is asking to have an involuntary Chapter 7 bankruptcy petition dismissed. The group of creditors filed the petition against TPG Troy LLC in December 2012.

TPG Troy claimed that it could not be forced into bankruptcy since the business entity had already been dissolved and therefore no longer exists. However, SPQR and other creditors of TPG Troy are arguing that even if a company has been dissolved, it is still liable for debts owed. The creditors claim that TPG Troy owes approximately $143 million due to a default by a telecommunications company which was partially owned by TPG Troy.

The telecommunications company's default on repaying loans has resulted in 13 civil lawsuits filed against TPG Troy by creditors. This case shows that filing bankruptcy for a business may not always be straightforward, in Texas or in any other state. Even the legal procedure and the paperwork required can be confusing, and the right professional assistance may make all the difference.

Source: Thomson Reuters News & Insight, "Creditors of defunct TPG funds defend forced bankruptcy," Nick Brown, March 20, 2013

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