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Ledgemont Capital files for Chapter 7 bankruptcy

In today's unpredictable and uncertain economic environment, financial firms and banks may end up running into financial challenges. Although there are many things firms and banks can do to minimize these challenges, sometimes a firm's liabilities become too much of a burden in Texas or in any other state. One investment bank, Ledgemont Capital Group LLC, ran into this problem, which resulted in the bank filing for a Chapter 7 bankruptcy.

The boutique banking firm's bankruptcy petition lists anywhere from $10 million to $50 million in total assets. The bankruptcy trustee assigned to the case will now be in charge of liquidating all of Ledgemont's assets in order to repay creditors. According to the bankruptcy petition, the bank has liabilities ranging anywhere from $1 million to $10 million total.

The bank attempted to collaborate with another foreign investment bank, known as Renaissance Capital, in underwriting a $460 million initial public offering from FriendFinder Networks Inc, which is the publisher of Penthouse, the adult magazine. Although the public offering of the company's stock was planned for 2008, it actually did not go public until 2011. However, FriendFinder listed two other different companies as underwriters, instead of Ledgemont and Renaissance.

A Chapter 7 bankruptcy, such as the one in this case, can be filed by either an individual person or a business in Texas or in any other state. This type of bankruptcy is designed to liquidate all assets owned by a business. However, at the end of the bankruptcy process, the business will no longer exist as a legal entity. For consumers, this type of bankruptcy is commonly used to discharge credit card debt as well as other unsecured debts.

Source: Chicago Tribune, "Boutique investment bank Ledgemont seeks Chapter 7 bankruptcy," May 6, 2013

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