We can all agree that these tough financial times are bad for both big and small businesses. With the tough financial times comes a pile of debts that may cause agony to any business owner. If you feel overwhelmed by your business debts, then you may consider filing for bankruptcy. Although it is not a good thing for your business to be declared bankrupt, you may at least get some relief from the stress that it may have on your life. However, filing for bankruptcy is not that easy, and you will need to understand some basic steps involved in business bankruptcy and how to cope with it.
The Good Side
The first thing you need to understand about business bankruptcy and how to cope with it is that it can be a useful tool if you are looking to restructure your business. It can be very valuable if you intend to reorganize your business’s assets and liabilities so that your business can continue operating while minimizing financial burdens. Secondly, it can be valuable if you want to liquidate your business’s assets and wind up the business efficiently.
Business bankruptcy can also allow your otherwise profitable business that is struggling with debts to reduce financial strains. If you decide to file for bankruptcy, it can help you stop debt collection and litigation activities thus enabling you to wind up your business’s affairs in a more orderly fashion.
Getting an Attorney
One important thing you should keep in mind about business bankruptcy is that your business will need to be represented by an attorney in the court proceedings. In order to ensure success as well as efficiency of your business’s bankruptcy, it will be essential for you to seek the services of an experienced and qualified bankruptcy attorney. It is important to consult a bankruptcy attorney because each bankruptcy filling is special and specific to certain financial circumstances of each business. Business bankruptcy is a very complicated process that requires the expertise of a seasoned legal professional.
Types of Business Bankruptcies
The most common and relevant chapters of the Bankruptcy Code for businesses is Chapter 7 and 11. Understanding the provisions of these chapters is an important element of business bankruptcy and how to cope with it. If you file for bankruptcy under Chapter seven, it will lead to the liquidation of your business. The proceeds from the liquidation process will be used to pay off your business’s creditors. Under Chapter 7, you will not retain control of the business and a trustee will be appointed to liquidate and collect your business’s assets.
Under Chapter 11, you will retain control of the business although a trustee can be appointed if there is a good reason. Reasons for appointing a trustee may include dishonesty, fraud, incompetence, and gross mismanagement. Additionally, a trustee may be appointed in rare instances if it is in the creditor’s best interests.
Overall, the wisest decision you can make on business bankruptcy and how to cope with it is to look for a good bankruptcy attorney to advice you on your best options.