Should You File For Business Bankruptcy And How Should You Do It?
If your business is not doing so well and you have outstanding debts you’re going to be delinquent on, should you file for bankruptcy? Maybe you wonder why you should do that instead of just selling the business and liquidating its assets to pay off the debt. You probably can do that, and if you can you should to avoid expenses in legal fees. But sometimes you have such a mess in debt with multiple creditors and assets tied up in things that make them more difficult to liquidate on your own, and in that case a bankruptcy court may be needed to straighten everything out. So what should you know if you’re considering filing for any commercial bankruptcy scarborough me?
Choose An Attorney Who Can Work With Your Specific Type Of Bankruptcy
Commercial bankruptcy is going to be a long drawn out process, and there’s basically three chapters you’ll have the option to file for depending on your situation and business type. It’ll take some time and working with your creditors to come to a formal bankruptcy agreement. Here’s what the three chapters basically entail:
1. Chapter 7 bankruptcy means your business has no way out of debt, and the closing down and liquidating of your assets to pay off debt will be carried out by a trustee
2. Chapter 11 bankruptcy means the business will not be closed down or have its assets liquidated; but it will undergo changes to make it profitable again, and the creditors will have a say in that
3. Chapter 13 is for sale proprietorship businesses which allow the owner to pay off debt in installments over a period of time.
The right attorney will be able to assess your business situation and help you find exemptions if you need to retain certain assets. You may also be advised to file for personal bankruptcy if any of your personal assets are at risk.
Craft A Good Plan For Chapter 11 Bankruptcy
Chapter 11 bankruptcy usually will be the most time-consuming of all the bankruptcy filings because your creditors and the judge will need to be convinced your business reorganization plan will work. As this article explains, there will also be many decisions that the court will have the final say over such as opening another business location, shutting down certain operations, taking out another loan or changing attorneys. Also, while being approved for chapter 11 bankruptcy allows your business to keep going, liquidating certain assets could still be required in some cases.
To make sure you have a good strategy in a commercial bankruptcy case, you need to make sure you’ve got the right attorney who’s successfully represented business clients over the years. You want to know that you’ve got the right petitions filed, have your financial statements in order, know how to handle situations if the creditors violate a court-ordered stay and know how to keep your personal assets safe if you feel a creditor is wrongfully trying to seize them. Usually the state bar will have listings of attorneys who specialize in corporate law and know the ins and outs of bankruptcy proceedings.