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Washington D.C. nonprofit shuts doors, files for Chapter 7

It appears that even nonprofit groups in the Washington, D.C., area are not immune to the ravages of the recent economic downturn. One of the most prolific volunteer groups in the area has been forced to file for Chapter 7 bankruptcy after experiencing recent financial problems. HandsOn Greater DC Cares, known for its massive volunteer coordinating efforts, is closing its doors after a 24-year run in the community.

Official reports show that the nonprofit only lists about $34,000 in assets, though it is liable for more than $530,000 in debt. Among the largest creditors are Bank of America, which lent the group more than $162,000, and a communications company that was not paid for the lease of an office space.

Workers at the company say they knew financial problems were on the horizon when the nonprofit slashed its workforce from 25 in 2010 to just three workers in 2011. The nonprofit had undergone an expansion during the early part of the decade, but it was struggling to meet its financial obligations that year after bringing in just over $1 million in revenue. The nonprofit is perhaps best-known for its community involvement that facilitated the Martin Luther King Day of Service, among others. News reports show that the group had a significant impact on the area, connecting some 40,000 volunteers to hundreds of other nonprofit enterprises in the area.

In this case, it is likely that the group's assets will be completely liquidated. Chapter 7 bankruptcy is not always a death knell for nonprofit groups or small businesses, as it can create a clean slate to start again. Certain factors contribute to the decision to declare Chapter 7 bankruptcy instead of restructuring under Chapter 11 protection; qualified bankruptcy attorneys can help administrators make those difficult choices. It is not yet clear whether the nonprofit intends to restart its efforts after the bankruptcy proceeding is complete.

Source: www.washingtonpost.com, "HandsOn Greater DC Cares files for bankruptcy" Vanessa Small, Sep. 26, 2013

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