Mark, about the only thing that'd be worthwhile would be to find out whether they were already in Ch 11 prior to filing Ch 7. IIRC, anyone who's owed for debts incurred by a company that's in Ch 11 will have preferential payment over debts incurred prior to the Ch 11 filing.
Past that, I'd say any further effort is useless, particularly in relation to a Ch 7.
The bankruptcy courts are a perverted wart on the ass of justice that would make even the current Congress look like a fine bunch of first class citizens.
Here's a classic example of how these useless assholes totally fail to do their jobs or to uphold laws related to how businesses are supposedly required to operate.
Local guy works for several years as an estimator/project manager for the largest electrical contractor in the area. He quits and starts his own electrical contracting business. Starts out small, but once he's been in business for about 3 years, and long enough to have good credit established with suppliers and subs, he starts booking loads of work as compared to what you'd expect for a contractor with a few employees.
Simultaneously, he starts construction of a house worth something north of $1.5 million overlooking Lake Lure. Begins to slowly get behind on debts of the business, but any work done on the house is paid for straight away, and he's booking all costs related to the house as costs against the contract jobs he's got going on.
About the time the house is complete, he files Ch 7 with 7 figure debts and assets consisting of a few well used trucks and miscellaneous tools, etc. Federal bankruptcy auction ensues, and the total of the sale is less than $100K. The auction company got its cut, and the remainder went to the lawyers as is always the case.
But, wonder of wonders, he just happens to own the house free and clear. Of course it was built with money owed to suppliers and subs on the contract jobs.
Bankruptcy court did nothing more than rubber stamp the filing which claimed XXX assets and XXXXXX liabilities, along with a request for discharge via liquidation.
If this clown had paid himself a sufficient salary to cover building the house over a couple years, two things would've happened. One, the salary would've been totally out of line with the size of the company and its potential profitability. And two, he would've had state and federal tax liabilities exceeding 40% of the take, so it would've taken him longer to cover the cost of the house. But, by running the cost of the house thru the various jobs, he created a set of books that looked as if he'd just simply had costs that grossly exceeded the revenue from the jobs.
This is classic cut and dried tax evasion on his part since he didn't report the value of work done on the house as income. Its also a major case of fraud in that he illegally diverted money owed to creditors to his own personal use and profit.
If the court had taken even a cursory look at the circumstances, and ordered an analysis of his books, it would've become immediately obvious what he was doing. Any CPA firm familiar with accounting practices related to electrical contractors could've produced enough evidence within a few days to have put the house into the asset pool and his ass in hot water with the criminal court system. It doesn't take a genius to figure out it doesn't take lumber or brick work or any other such residential building materials to wire commercial jobs. There are relatively constant patterns to legitimate bankruptcy, in that the business gets in increasingly worse shape over a period of time, or some other party who owes the company a load of money goes bankrupt and takes the company down with them. He was paid for all the contract work he did, and went from operating profitably to supposedly incurring massive losses almost overnight. That doesn't fit the pattern, and, if the court was making any effort at all to protect the interests of the creditors, they would've ordered a closer look to learn whether it was caused by some set of unfortunate circumstances or if they were just dealing with a thief.
This all happened well in advance of the crash of real estate markets and the economy. If the house had been put into the asset pool as it should've been, it would've sold for enough to cover all the debts of the company. Instead, he ended up with the house debt free, plus another house he already owned that was worth something in the $300K range. Instead of the bankruptcy court doing its job in protecting the interest of the creditors, it has all too often become a body that gives sanction to the acts of so-called business people who are in fact nothing more than common criminals by any definition of the term.
