A real estate company went bankrupt after investigations on channel 2

Just days after we reported that members of the U.S. Senate are demanding answers from a real estate company about its 40-year-old contracts for sale, Channel 2 Action News has learned that the company has filed for bankruptcy.

Consumer protection investigative reporter Justin Gray previously reported on MV Realty for more than a year and its 40-year-old contracts for sale. The way the company worked was this: you contracted with the company to get a small check now, but pay a large penalty amount later - 3% of the value of your home - if you didn't use it to sell.

The company filed for Chapter 11 bankruptcy Friday. "It certainly shows that they are in financial trouble because their business model has harmed people and they got caught," said Georgia Watch Executive Director Liz Coyle.

It's unclear how the bankruptcy filing will affect customers with 40-year sales contracts. However, the future of these contracts may be decided by the bankruptcy court. "During bankruptcy, you distribute assets. So, are these contracts assets that should be sold for the debtor's benefit, or can we convince the bankruptcy court that these contracts are void and fraudulent?" - said National Consumer Law Center attorney Sarah Mancini.

Since our Channel 2 Action News investigations first revealed problems with MV Realty, six state attorneys general have taken legal action, and 16 states, including Georgia, have passed new legislation targeting the company's controversial contracts and liens. All of these attorney general lawsuits were stayed, at least temporarily, due to the bankruptcy filing.

Earlier this week, Florida's attorney general asked the court to freeze the company's assets, which may have prompted the bankruptcy filing. The petition states that MV Realty has between $50 million and $100 million in liabilities. A law passed earlier this year by the state General Assembly has essentially put an end to controversial contracts in Georgia, but that doesn't mean an end to the problems - the law only applies to new contracts.

This month, three U.S. Senate committee chairs sent a letter to MV Realty saying that while MV Realty has "temporarily suspended" new registrations, it continues to advertise the homeowner program on its website. "We are concerned about MV Realty's practices toward owners already enrolled in the program and the potential consequences if HBP enrollment resumes," the letter said.

MV Realty said in a previous statement that they are "confident that the homeowner program is fully compliant with the law and benefits consumers who choose MV Realty as their selling agent. We are fully cooperating with the committees involved and will provide a full response to each of the senators' inquiries." MV Realty said it does not currently sign people up for 40-year contracts. We are expected to learn more about the bankruptcy plan when the company provides the required documentation in the coming weeks.