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Texas music events company files Chapter 7 bankruptcy

Businesses must constantly evolve in order to continue to be profitable and also to remain relevant. This is why many companies are continually investing funds in improved infrastructure as well as expanding their capabilities. However, making the wrong decision while attempting to improve a business may actually end up causing more harm than good. This seems to have been what happened with one company in Texas which recently filed for a Chapter 7 bankruptcy.

The company, Direct Events Inc., which formerly owned a music venue, attempted to improve the venue by investing in the building's infrastructure. The company spent $8 million on the venue's renovation. By the time the renovation was completed in 2007 the venue had almost doubled in size to approximately 43,000 square feet. However, the renovation created poor acoustics as well as poor sight lines, resulting in a dramatic drop in the venue's business.

This put the company in overwhelming debt which was exacerbated by its decrease in business. The company's bankruptcy filing admitted the company owned no assets after its lending bank foreclosed on the company's music venue. The bank has since made over $300,000 in additional improvements and has turned the management and promotions for the venue to another company. Direct Events also reported approximately $3.5 million of liabilities in its bankruptcy petition.

Filing a Chapter 7 bankruptcy in Texas may have been a wise choice for the owner of the company since the company did not have any assets to protect, but still had a significant amount of debt. This type of bankruptcy enables the petitioner to discharge all of its debts, though the company will cease to exist as a legal entity. On the other hand, the owner of the company will now be able to move forward with his next business venture free and clear of the financial obligations of Direct Events Inc.

Source: Austin Business Journal, Direct Events Inc., former Austin Music Hall owner, files Chapter 7 bankruptcy, Chad Swiatecki, Aug. 22, 2013


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