It is not unheard of for a business venture to sound like a good idea in theory, but then turn into a bust when trying to put it into play. For the person behind the business, when this happens and a lot of money has already been tied up, this can lead to a personal bankruptcy.
A perfect example of this recently happened when the founder of SportsQuest filed for Chapter 7 bankruptcy. This personal bankruptcy was filed less than a year after SportsQuest filed for a liquidation bankruptcy.
In looking at what happened, the founder had a vision for a 250-acre sports facility. The plans for the facility were constantly changing with the ideas of professional and amateur teams, a performance venue -- and at one point -- an expensive boarding school focused on sports training. The owner continued to promote this facility and his evolving plans for more than two years.
Some work did go into the facility with 12 turf fields built. However, things never totally came into fruition and employees went unpaid, debts piled up and eventually 120-acres of the facility were taken through foreclosure. The SportQuest owner was ousted in April 2012. SportsQuest filed for Chapter 7 bankruptcy in August.
In the founder's personal bankruptcy, much of the debt listed is tied to the sports facility he once imagined. In the filing, $579,000 is listed in assets and $2.06 million is listed in liabilities. These liabilities include:
- $40,000 in credit card debt
- $821,000 to a bank that the founder personally guaranteed
- A $301,000 tax lien on the founder's home
The plan going forward is for the founder's assets to be liquidated in order to pay back creditors. Through this bankruptcy process he also plans on continuing to make the mortgage payments on his home. This home was most recently assessed at $594,000, with $283,000 still being owed on the home.
Since being ousted from SportsQuest he has been working as a consultant for a sleep testing medical device. This is the same industry he was working in before trying to make his vision for the mega-sports facility come true. He reportedly earns around $6,000 a month as a consultant.
The hope for the future, like many who file for bankruptcy, is that this will be a way for him to restart and wipe the debt slate clean.
Source: Richmond Biz Sense, "SportsQuest founder files for bankruptcy," Michael Schwartz, May 1, 2013