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Another North Carolina company has gone under and opted to file bankruptcy to liquidate their debts as they close up shop. Tarheel Plastics in Lexington filed for Chapter 7 bankruptcy a few weeks after laying off more than 75 employees. This is a drastic change from just a few months ago when the company was planning an expansion and promising more jobs.
What Happened to Tarheel Plastics
In March, Tarheel announced an expansion in Triad and estimated nearly 50 new jobs would be added at their facility there. They splashed out millions investing in a plant in Mocksville and equipment. Based on this investment and the creation of the new jobs, Tarheel would have been eligible for a $480,000 grant from the state for reusing a vacant facility for its new plant.
However, a representative for North Carolina’s Rural Center – which would have paid out the grant – said the state grant money was never paid out because there were never more than four employees at the new site as the project failed. At one point Tarheel was up for sale, but the sale fell through and the bankruptcy is the result of their financial struggles and failed bid to find a purchaser.
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Tarheel’s Filing Details
Tarheel’s filing shows more than $3.5 million in debts and less than $2.5 million in assets. Of the liabilities, nearly $1 million is owed to unsecured creditors – among these could be employees owed wages. A Chapter 7 bankruptcy means that the business is attempting to get out from under its obligations and does not expect to restart operations.
If Tarheel had wished to keep its doors opens, it would have filed for a Chapter 11 in order to try and reorganize the debts to stay afloat. When a company files Chapter 7 without attempting a reorganization of debts first, this is not a good sign. Likely we won’t know specifically what happened at Tarheel that drove them to this drastic measure.
What Does the Tarheel Filing Mean?
So what does this mean for you and for North Carolina in general? Any time a company goes out of business, this equates to jobs lost. Typically, companies do not give their employees a heads up that the company is going belly up so they have no opportunity to job hunt before their employment ends. They also rely on expected wages but, often final paychecks are not paid, accrued paid time off is lost and pensions may be in doubt.
Beyond the paycheck expected and not received is the loss of benefits. Employees whose company goes out of business may find themselves without benefits coverage right away. If you or a family member have an ongoing illness that requires monthly medications or doctor visits, paying out of pocket for these when benefits evaporate along with the loss of a steady paycheck can add up to financial disaster.
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What to Do If You are Affected by a Corporate Bankruptcy Filing
Most bankruptcies are due to major life events such as personal illness, illness of a family member, job loss or an accident that causes major injuries or disability. If you have a double whammy of significant medical expenses or student loans and lose your job without notice, it may be too much to deal with.
For those that lose their jobs, applying for unemployment benefits immediately is critical. Applying for Medicaid is also a wise strategy if the company fails to provide COBRA due to their bankruptcy filing. Food stamps and other assistance programs should be considered as well if you don’t have a significant nest egg to protect your financial stability or if you don’t want to dip into it.
If you are laid off as part of a corporate Chapter 7 or Chapter 11, you may be reeling from the news and in shock that you lost your job. It’s critical not to get too bogged down in asking “why” or “why me?” and instead to take immediate action to protect your finances. In addition to filing for the benefits mentioned above, if you owe student loans or have taken out student loans for your children’s education, you should apply for deferment or forbearance immediately to protect your credit rating.
Finally, if your finances were already dire and you were living paycheck to paycheck with a pile of debts of your own, your job loss may represent a tipping point. If this is your circumstance, contact the law offices of John T Orcutt for a free consultation to find out if filing personal bankruptcy is recommended to protect your finances, your family and your future.