CHARLOTTE, N.C. — On Monday, the first set of bankruptcy hearings took place virtually in the case of GT Real Estate, a company responsible for the Carolina Panthers practice facility project in Rock Hill.
The company is owned by David Tepper, owner of the Carolina Panthers. It filed for Chapter 11 bankruptcy last week, effectively killing the multi-million-dollar practice facility project.
But what comes next, many viewers have asked.
Luckily, there is an outline of expectations and legal obligations, thanks to the US Bankruptcy Code.
THE QUESTION
When a company files for bankruptcy, can it write off debt all on its own?
OUR SOURCES
THE ANSWER
No, a company that's filed for bankruptcy cannot write off its debt on its own.
WHAT WE FOUND
The law outlines a process to follow once a company files for Chapter 11 bankruptcy. There are hearings and meetings among creditors to negotiate the money they are owed.
"The belief is that through negotiations between a well-informed debtor and a well-informed set of creditors, they'll strike a bargain at the midpoint," Cox said.
Cox said depending on how those negotiations go, the debt creditors collect might be reduced based on what the company can pay, but the company in bankruptcy can't simply "wipe away" its debt by itself.
"The debtor cannot unilaterally absolve itself a debt," Cox said. "It cannot just suddenly say, 'Well, you know, the heck with you, I'm not going to pay you.'"
The debtor needs to work with creditors, come up with a plan, and submit it for court approval.
This process could take weeks to months to years, Cox said.
And, according to bankruptcy code, creditors might not get back the money they are owed by the debtor.
VERIFY is dedicated to helping the public distinguish between true and false information. The VERIFY team, with help from questions submitted by the audience, tracks the spread of stories or claims that need clarification or correction. Have something you want VERIFIED? Text us at 704-329-3600 or visit /verify.