The bankrupt tax-resolution company JK Harris will be liquidated by a court-appointed trustee, a judge ruled this morning in Charleston, leaving nothing for consumers in more than 20 states who had been promised cash settlements for claims that the company had misled them.
The Goose Creek firm filed for bankruptcy protection in October, to pre-empt an effort by the Texas Attorney General to force the company into receivership over payments related to consumer complaints. After failing to find a buyer for the heavily indebted company, JK Harris shut down its offices two weeks ago, putting more than 100 local employees out of work.
This morning the company's bankruptcy case, along with two affiliated companies, was converted to a Chapter 7 bankruptcy, which means a trustee will be appointed to gather any assets available and distribute them to creditors.
With an estimated $34 million in debts — most of which represents the consumer settlements — and most company assets already claimed by a New Jersey lender, unsecured creditors are expected to receive nothing at the end of the process.
"There will be no recovery at all for the $20 million in general unsecured claims," said William McCarthy, the bankruptcy attorney for the company.
Thousands of clients of the company, who had been counting on JK Harris to help settle their federal tax problems, will need to pursue help elsewhere, with little hope of recovering funds already paid to the company.