Business Bankruptcy – What Is Business Bankruptcy?
Business bankruptcy is one of the most sought out debt relief strategies available for businesses of all sizes. There are two types of bankruptcies available to entrepreneurs: Chapter 7 and Chapter 11. However, a Chapter 11 is more complicated. suited for those companies that are facing temporary hardship, a Chapter 11 bankruptcy gives them an opportunity to reorganize their debt while still maintaining control of the day-to-day functions. However, there are certain actions that warrant court approval while businesses are in a Chapter 11 bankruptcy. These include:
- the sale of major assets,
- altering any rental any rental or lease agreements
- or making any major financial decisions.
When you file a Chapter 11 bankruptcy, you have to include a repayment plan that indicates how financial obligations will be honored over time. Chapter 11 payment plans can be rather complex so it is advisable to seek out the help of an experienced business debt relief lawyer.
For those businesses that wish to liquidate and shut down, a Chapter 7 bankruptcy is more useful. A Chapter 7 business bankruptcy is a process whereby the trustee sells the assets of the business and use the proceeds of the sale to pay off creditors in order of priority. There is no bankruptcy discharge and debtors are entitled to any exemptions. In some circumstances it may make sense for this business owner to file a personal Chapter 7 bankruptcy particularly if the business owner co-signed or personally guaranteed any business loans.
An attractive tool of a business bankruptcy is the Automatic Stay. Whether you file a Chapter 13 or a Chapter 7, this provision in bankruptcy law prevents creditors from engaging in any collection activities including lawsuits. A business bankruptcy gives business owners to manage their finances and not worry about about creditors closing in on them. If a business bankruptcy is not the right approach for you, there are many other debt relief strategies that may work for you. Speak with one of our experienced business debt relief lawyers to determine if bankruptcy is the right choice for you.