_There was a time that bankruptcy was considered a very touchy topic. However, as time flies, people became more aware of what business bankruptcy means, especially Chapter 11, which pertains to reorganization of the business. When a business finds it difficult to meet its financial obligations, a bankruptcy is almost certainly to follow. The required interest for the loans that the business needs to pay usually eats up the company’s revenues, thereby leaving the company financially distressed.

While there may be various business bankruptcy options available for a company, it is still important for a business to weigh these options first, before deciding on one. There is also a need for a bankruptcy attorney to be appointed by the company, one who is aware of the bankrupt laws that can be applied. In fact, bankruptcy lawyers can present the company with other feasible options, and not just bankruptcy.

The following are the different business bankruptcy options that are available for financially constrained businesses:

1. Chapter 7 - Liquidation. If the business does not see any hope in the future because of an unprofitable product line or lack of assets or impossible debt, then it must file for protection under Chapter 7. Chapter 7 is ideal for sole proprietors and small businesses, where the name of the business is directly connected to the name of the owner or owners. In this type of bankruptcy, business assets are sold and the proceeds from the sale are used to compensate creditors. Once the proceedings are over, the company would not exist anymore.

2. Chapter 11 - Reorganization. This is opted for by companies with potentials but are hounded by debts. This allows a company to reorganize the structure and the manner by which it performs operations, hence giving more time to the company to pay up its debt. The company needs to submit a reorganization plan together with its petition for bankruptcy, which must be approved by its creditors. If creditors approve the reorganization plan, then the company must comply with the terms in the plan. When the creditors are paid and the plan has been executed fully, then the debts of the company are eliminated.

3. Chapter 13 - Wage Earner Plan. It is referred to as wage earner's bankruptcy, and a sole proprietor who has mixed up his personal assets in his business, so he can gradually repay his debts from his wages. This Chapter helps protect the personal assets of sole proprietors.

4. Chapter12 - Family Fishermen Bankruptcy. Farmers and fishermen can seek protection from their creditors under Chapter 12 bankruptcy.

These are the various business bankruptcy alternatives that you can choose from. Businesses have to consider whether it would need liquidation or mere reorganization, take a look at secured debts, tally all their resources, and take time to ponder upon whether or not to hire a business bankruptcy lawyer to handle bankruptcy filing.

If you own an incorporated business and you need to ask for business bankruptcy protection, two options that you may be considering are Chapter 11 and Chapter 7 bankruptcy. If you choose to file for a Chapter 7 business bankruptcy, the federal court presiding over your petition will appoint a trustee who shall be deemed as the temporary owner of your business and assets. You will be made to sit on the sidelines while this trustee decides what management to fire, what new management to hire, how to repay your creditors with your assets, how the business can be better structured and operated, and so on. Chapter 7 business bankruptcy filing may be your best option (or even your only viable option), depending on your circumstances. Yes, it is still something that is there for your protection and the protection of your creditors. There are certain businesses however, that opt to seek for business bankruptcy protection under Chapter 11.

Chapter 11 business bankruptcy filing allows you to retain command and control over your business operations and business assets. In this type of bankruptcy, the court stipulates that your management team will be considered as “debtor-in possession”, otherwise known as DIP. This DIP acts as an agent that negotiates agreeable payment plans with your creditors. These payment plans may mean periodic partial payments until a debt is paid off to some creditors, while other creditors may agree to take a lesser amount than what is owed to them in exchange for ceasing all legal collection attempts against you. The DIP functions in the capacity of a court appointed trustee, except that it comes from within your own organization and no-one is appointed by the court. The DIP is going to have the business' best interests in mind, whereas a court appointed trustee cares more about paying off creditors.

While Chapter 7 business bankruptcy dwells more on liquidation, Chapter 11 is mainly about restructuring. This means that the operations and composition of your business get changed around so that debts can be paid in a timely manner while the business continues to operate and grow. This may necessitate you to lay off workers, either permanently or temporarily, and may even warrant you to excise one entire department. The DIP will be the one who will oversee the whole process and ascertain what caused the inefficiencies among the company, which eventually resulted to the inability to pay up creditors in a timely manner, and will make sure that those responsible for such inefficiencies are eliminated. The federal court presiding over your Chapter 11 business bankruptcy petition will necessitate you and your creditors to make periodic progress reports regarding the whole process.

In the event that some or all of your creditors remain unhappy with the actions of your DIP, they can petition the court to replace the DIP with its own appointed agent. This is not at all to your business' advantage. Because of this, it is just proper for you to hire an attorney who has the expertise in business bankruptcy law if you are considering filing for Chapter 11. His title will be “Debt Relief Agent”. Your lawyer can give the proper advice to your DIP, and will be able to negotiate with creditors. That way, filing for Chapter 11 business bankruptcy would not result to your business’ destruction.

If your business needs bankruptcy protection, first seek the advice of a bankruptcy lawyer who can advise you on which filing option would be better for you. Likewise, you might also find an alternate solution to filing bankruptcy. Filing for business bankruptcy should be regarded as a last resort when searching for ways to save your business.