Individuals, creditors and businesses are protected by the bankruptcy law of the United States. Business bankruptcy laws facilitate and enable reorganization of debt to pay off creditors without the business being destroyed or the orderly liquidation of assets to pay off creditors and divide up a failing business for others to buy up parts of and try to make successful. These laws therefore protect businesses and their owners and operators as well as creditors, consumers, and the economy in general.
The federal courts of the United States is the one that presides over bankruptcy cases. In 1978, the federal law established two types of bankruptcy namely, Chapter 7 and Chapter 11. There is also what is known as Chapter 13 bankruptcy, but incorporated businesses cannot file under that type. On the other hand, self-employed individuals could file under Chapter 13.
For businesses, Chapter 7 would entail filing a petition for bankruptcy, then a court-appointed interim trustee would be in control of the business’ non-exempt assets and accounts. During the time that the appointed and temporary trustee would be in control of the business, he exercises a broad power over it. Finding unsecured financing, making managerial changes, and liquidating assets so as to pay off creditors while trying to keep the business from total failure are all within the scope of the trustee's powers. Therefore, for liquidation, a Chapter 7 bankruptcy is the ideal option.
Chapter 11 is the bankruptcy option that has to do with reorganization. Under this option, the court oversees a flexible process by which the debtor business and its creditors work out payment arrangements to their mutual benefit and solution. The business' principals maintain control of the business and remain in possession of its assets. In court records, the business management team is the “debtor-in-possession”, or DIP, and there is no appointed trustee. However, if the creditors see that no viable solution is arrived at by the DIP, and that the assets are still mismanaged, they can petition the court to intervene and to appoint its own agent that will replace the DIP. For the federal court to do this intervention, it must be satisfied with evidence that the creditors are correct in their assessment of continued mismanagement.
Businesses must file forms such as those documenting liabilities and assets with perfect accuracy and in the correct manner with the federal court. The business may lose its bankruptcy protection, and the business could be totally lost, if it fails to accurately and correctly file the forms needed. Hence, if you are the sole owner of a business or if you have partners in a business, and you have come to see that you may need to file for bankruptcy, then you must consult a bankruptcy lawyer. When the lawyer is working in this capacity with you, he would be put on file by the federal court as a “Debt Relief Agent”.
If you own a business and you and any partners are considering filing for bankruptcy, consult a bankruptcy lawyer who has experience working with business owners.
The federal courts of the United States is the one that presides over bankruptcy cases. In 1978, the federal law established two types of bankruptcy namely, Chapter 7 and Chapter 11. There is also what is known as Chapter 13 bankruptcy, but incorporated businesses cannot file under that type. On the other hand, self-employed individuals could file under Chapter 13.
For businesses, Chapter 7 would entail filing a petition for bankruptcy, then a court-appointed interim trustee would be in control of the business’ non-exempt assets and accounts. During the time that the appointed and temporary trustee would be in control of the business, he exercises a broad power over it. Finding unsecured financing, making managerial changes, and liquidating assets so as to pay off creditors while trying to keep the business from total failure are all within the scope of the trustee's powers. Therefore, for liquidation, a Chapter 7 bankruptcy is the ideal option.
Chapter 11 is the bankruptcy option that has to do with reorganization. Under this option, the court oversees a flexible process by which the debtor business and its creditors work out payment arrangements to their mutual benefit and solution. The business' principals maintain control of the business and remain in possession of its assets. In court records, the business management team is the “debtor-in-possession”, or DIP, and there is no appointed trustee. However, if the creditors see that no viable solution is arrived at by the DIP, and that the assets are still mismanaged, they can petition the court to intervene and to appoint its own agent that will replace the DIP. For the federal court to do this intervention, it must be satisfied with evidence that the creditors are correct in their assessment of continued mismanagement.
Businesses must file forms such as those documenting liabilities and assets with perfect accuracy and in the correct manner with the federal court. The business may lose its bankruptcy protection, and the business could be totally lost, if it fails to accurately and correctly file the forms needed. Hence, if you are the sole owner of a business or if you have partners in a business, and you have come to see that you may need to file for bankruptcy, then you must consult a bankruptcy lawyer. When the lawyer is working in this capacity with you, he would be put on file by the federal court as a “Debt Relief Agent”.
If you own a business and you and any partners are considering filing for bankruptcy, consult a bankruptcy lawyer who has experience working with business owners.
RSS Feed