Bridger Steel, Inc., a Montana metal roofing and siding fabricator, filed for Chapter 11 bankruptcy on February 24, 2023, in the U.S. Bankruptcy Court for the District of Montana, then converted to a Chapter 7 liquidation less than four months later, on June 13, 2023.1GovInfo. Memorandum of Decision in Re Bridger Steel, Inc. The company will not reorganize or reopen. Anyone owed money, product, or wages is now a creditor in a liquidation, and recovery depends on where their claim sits on the statutory priority ladder.
What Pushed the Company Into Bankruptcy
The immediate cause was a cash crunch. On December 19, 2022, sixty-seven days before the filing, Bridger Steel entered a merchant cash advance agreement with The LCF Group, Inc. that required automatic daily sweeps of roughly $4,967 from the company’s checking account. A merchant cash advance is not a traditional loan. The lender buys a share of future revenue in exchange for an upfront payment and collects through daily debits, often at an effective rate far above what a bank would charge.
The daily withdrawals drained operating cash faster than revenue replaced it. By late February, Bridger Steel could not cover payroll for its roughly 57 employees or fund basic operations, and it filed for Chapter 11 protection. That same MCA agreement later became the target of a lawsuit by the Chapter 7 trustee.
From Reorganization to Liquidation
Chapter 11 is meant to let a company keep operating while it works out a plan to pay creditors over time. For a short window, Bridger Steel’s existing management remained in place as a debtor-in-possession and sought court approval to use cash collateral to pay essential expenses, including payroll.1GovInfo. Memorandum of Decision in Re Bridger Steel, Inc.
That effort failed. Under 11 U.S.C. 1112, a Chapter 11 case can be converted to Chapter 7 when the debtor is suffering continuing losses with no reasonable likelihood of rehabilitation.2Office of the Law Revision Counsel. 11 USC 1112 – Conversion or Dismissal On June 13, 2023, the court converted the Bridger Steel case. Management lost control of the business, and Richard J. Samson was appointed Chapter 7 trustee to gather and sell the company’s assets, review every proof of claim, and distribute whatever proceeds the estate produced.
The practical effect of the conversion: no more operations, no reorganization plan, no restored vendor relationships. The business is being wound down.
If You Are a Customer With an Order, Deposit, or Warranty
Unfulfilled orders placed before February 24, 2023, were executory contracts the debtor or trustee could choose to fulfill or reject under 11 U.S.C. 365.3Office of the Law Revision Counsel. 11 USC 365 – Executory Contracts and Unexpired Leases Once the case converted to Chapter 7, the business shut down and those orders could not be filled. A customer’s remedy is to file a proof of claim for the lost deposit or prepayment.
Consumer deposits get limited priority treatment. A customer who prepaid for products never received can claim up to $3,800 as a priority claim under the current cap effective April 1, 2025 (it was lower when Bridger Steel filed in 2023).4Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases Anything above that cap drops to general unsecured status.
Product warranties are the harder story. Warranties on items delivered before the filing are pre-petition obligations, and after the Chapter 7 conversion there is no operating company to honor them. A warranty claim can be filed as an unsecured claim, but there is no mechanism by which the panels, siding, or roofing material already installed on a building will be serviced or replaced by Bridger Steel. Customers who bought during the Chapter 11 window, between February 24 and June 13, 2023, stand on better footing because those transactions were administrative expenses of the estate.
If You Are a Former Employee
Wages earned before the filing date qualify for priority treatment under 11 U.S.C. 507, but only up to a statutory cap and only for wages, salaries, and commissions earned within 180 days before the petition.5Office of the Law Revision Counsel. 11 U.S. Code 507 – Priorities When Bridger Steel filed in February 2023, that cap was $15,150 per employee. Benefit plan contributions for the same window have their own per-employee cap.
Wages earned after February 24 but before the Chapter 7 conversion sit higher up the ladder as administrative expenses, which are paid before pre-petition priority claims.6Office of the Law Revision Counsel. 11 USC 503 – Allowance of Administrative Expenses Whether any wage claim gets paid in full depends on how much cash the trustee can generate from selling assets and litigating claims like the one against The LCF Group.
If You Are a Vendor or Other Creditor
Any debt the company owed before February 24, 2023, is a pre-petition claim. To receive anything from the estate, a creditor had to file a proof of claim (Official Form B 410) with the bankruptcy court before the bar date.7United States Courts. Proof of Claim The court set that deadline at August 22, 2023, for general creditors and August 23, 2023, for governmental units. Missing it means losing the right to collect from the estate. Roughly 250 claims were filed.
Where a creditor sits in the distribution order determines everything:
- Secured creditors with valid liens on specific collateral are paid first from the sale of that collateral. Any shortfall drops to unsecured status.
- Administrative expenses, including trustee fees, professional fees, and post-petition wages, come next.
- Pre-petition employee wages and benefits within the 180-day window and the statutory caps.
- Consumer deposits up to the current cap.
- General unsecured creditors, including trade vendors and material suppliers, come last.
Each tier must be paid in full before the next tier receives anything. If the estate exhausts itself paying administrative expenses, employees and vendors can receive nothing.
The Trustee’s Lawsuit Against the MCA Lender
The trustee filed an adversary proceeding against The LCF Group, the merchant cash advance company whose daily sweeps preceded the filing. The suit asks the court to disallow LCF’s claim against the estate, avoid its lien, recover payments as preferential transfers, and declare that the transaction was a loan carrying a usurious interest rate under Montana law.1GovInfo. Memorandum of Decision in Re Bridger Steel, Inc.
The LCF Group moved to send the dispute to private arbitration based on an arbitration clause in its pre-bankruptcy contract. The bankruptcy court denied the motion. The trustee’s claims arise from independent powers granted by the Bankruptcy Code, not from the contract itself, and sending them to an arbitrator would conflict with the collective claims process. The court found that splitting issues between an arbitrator and the bankruptcy court would create duplication, waste, and inefficiency that “fundamentally conflicts” with the Bankruptcy Code’s structure.
For creditors watching the case, the outcome of this lawsuit matters. If the trustee recovers payments from LCF or knocks out its claim entirely, more money flows into the estate and more flows down the priority ladder.
Realistic Expectations From the Estate
In a Chapter 7 case built on manufacturing equipment, inventory, and accounts receivable, the math usually works against lower-priority creditors. Secured lenders take their collateral. Trustee fees, attorney costs, and the expense of litigating against LCF come off the top as administrative expenses. Priority wage, benefit, and consumer-deposit claims come next, subject to their caps. By the time general unsecured creditors are reached, the pool is often a fraction of the total claims against it.
Creditors who filed timely proofs of claim will receive whatever pro-rata share the trustee’s final distribution produces. For general unsecured claims in a case of this size and shape, that share is typically small, and in some Chapter 7 cases it is zero. The timing depends on how long the trustee needs to liquidate assets and resolve the LCF litigation.