A volunteer fire company in Pennsylvania filed bankruptcy last week after a bank started foreclosure proceedings against it in December.
The Conneaut Lake Volunteer Fire Department filed for protection under Chapter 11 on January 12, 2016, seeking relief from the Mercer County State Bank. Conneaut Lake VFD reportedly owes the bank approximately $1.6 million on three loans.
Last December when the bank started its foreclosure action, fire company president George Zeljak told reporters: “Our mortgage is about $12,000 to $14,000 a month, our fuel bill is about $5,000 a month and our electric bill is about $5,000 month. That’s about $22,000 a month. We could cover it in the past, but the business hasn’t been there.” The business Zeljak is referring to is the operation of a social club that includes a restaurant and liquor license that is adjacent to its firehouse. He also assured the public that it would not effect fire department operations.
Chapter 11 bankruptcy is also referred to as “reorganization”. It allows a business immediate relief from creditors (ie. stops the foreclosure proceedings and other collection efforts) and provides a way to restructure its debts under the supervision of a federal bankruptcy judge.