Legal Question in Bankruptcy in Wisconsin

Bankruptcy
An S corp, corp has secured debt of $1,000,000 and unsecured debt of $1,600,000. In the unsecured are loans to corp by officers and stockholders of $1,000,000. If corp. files banruptcy and assets cover secured creditors and assets remain. Is the remainder dividided equally amoung unsecureds? What recourse do the unsecured have, and can the company continue in business after the approved plan to pay debts?

Thank you

Asked on 7/09/01, 11:33 am

JAY Nixon nixon law offices

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Re: Bankruptcy

This sounds like a chapter 11 filing, which

is an amazingly complex affair. I could not begin

to answer these questions without reviewings all docket

entries, debtor schedules and reorginization plans.

A lot of things which really should not happen,

like officers getting paid before other creditors,

often slip through the cracks because creditors do

not watch the case activities closely enough. Theoretically, all creditors in any

given class should be treated the same. I have

no idea how these insider claims are classified, as

compared to the others you mention.

Answered on 7/09/01, 6:34 pm

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