| Modern bankruptcy legislation arose out of
the Great Depression, with passage of the Bankruptcy Acts
of 1933 and 1934. The Bankruptcy Reform Acts of 1978 and
1994 made it easier for both businesses and individuals
to file, and record numbers did. There were 1.3
million personal filings last year. Perhaps more
surprising, given the strength of the U.S. economy, 2000
was also a record year for large corporate bankruptcies.
One hundred seventy-six publicly traded companies filed
for bankrupty protection, including 19 with assets of at
least $1 billion. Among them are once-prominent names
like TWA, Owens Corning, Levitz Furniture, Boston
Chicken, Fruit of the Loom, Heilig-Meyers, and Montgomery
Ward.
Under
Chapter 7 of the Federal Bankruptcy Code, a trustee is
appointed to liquidate assets. The money received is used
to pay off creditors and investors, if the filer is a
corporation. Administrative and legal expenses are paid
first. Bankruptcy law determines who will be paid next.
Secured creditors (i.e. those with collateral, generally
banks) have priority, then unsecured creditors
(bondholders) and stockholders.
The net
result is Federal Bankruptcy Courts are a seemingly
unlikely yet substantial source of unclaimed assets,
holding hundreds of millions of dollars in unpaid
distributions to creditors, and refundable fees owed
filers. Because these funds come under the purview of the
Federal Court System, they are not included in state
Unclaimed Property databases - the specific Court or
Trustee must be contacted directly. For assistance
tracing unclaimed bankruptcy funds go to:
Bankruptcy
Court Unclaimed Funds Search
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