Business bankruptcy may appear to be an easy way out for businesses that are heavily weighed down by debt, but bankruptcy is not as simple as it may seem. You need to determine whether or not your business has good potential. If your business does not have any future, then you may opt to file for bankruptcy under Chapter 7, which will help liquidate the business. However, if you can see some light at the end of the tunnel, you may prefer to file for bankruptcy under Chapter 11, which will help reorganize the business. Consider contemplating on and preparing the following before you file for business bankruptcy:
1. Keep your financial statements, tax records, and a list of contracts (executed and under execution) ready. These have to be filed together with the petition.
2. Filing for business bankruptcy demands an attorney who is an expert at your type of bankruptcy. For example, filing for a Chapter 11 bankruptcy would need you to have somebody who is an expert in Chapter 11 bankruptcy and not with a Chapter 7 bankruptcy. This is because under Chapter 11 bankruptcy, you must adeptly present your case to creditors and an attorney who specializes in Chapter 7 bankruptcy may not be good at it. Chapter 7 bankruptcy on the other hand, is very simple and blunt, your business must be liquidated and so the court will help you liquidate it. Reorganization under Chapter 11 bankruptcy would require discussions between you and your creditors, which would be more complex as compared to liquidation.
3. A Chapter 12 bankruptcy is for farmers, while a Chapter 13 bankruptcy, which is also known as a wage earners’ bankruptcy, is for sole proprietors, who are also wage earners.
4. It is essential that you will be honest with your lawyer, and inform him about the littlest financial detail that will support the bankruptcy case. Let him know about those things that are classified as priority debts which consist of employee benefits, child support, alimony, etc. Remember to notify your lawyer about how many creditors you have and whether they belong to secured, unsecured or partially secured creditors.
5. If you would be going for a Chapter 11 bankruptcy, you will be obligated by the court to be the case trustee (except of course in cases of fraud), and you will then become a debtor in possession. There will be an appointed committee of creditors, and a reorganization plan would be required of you to be handed in to court. If the committee of creditors approves of the reorganization plan you presented, then the court will give its affirmation. If Chapter 7 bankruptcy was your choice, then you need to submit to the court a list of your non-exempt assets, which will be sold off, and the proceeds shall be divided among creditors according to their priority.
Indeed, filing for business bankruptcy is not that simple and could get quite complicated in the process. Get hold of a lawyer who specializes in your type of bankruptcy before moving an inch. Good luck.
1. Keep your financial statements, tax records, and a list of contracts (executed and under execution) ready. These have to be filed together with the petition.
2. Filing for business bankruptcy demands an attorney who is an expert at your type of bankruptcy. For example, filing for a Chapter 11 bankruptcy would need you to have somebody who is an expert in Chapter 11 bankruptcy and not with a Chapter 7 bankruptcy. This is because under Chapter 11 bankruptcy, you must adeptly present your case to creditors and an attorney who specializes in Chapter 7 bankruptcy may not be good at it. Chapter 7 bankruptcy on the other hand, is very simple and blunt, your business must be liquidated and so the court will help you liquidate it. Reorganization under Chapter 11 bankruptcy would require discussions between you and your creditors, which would be more complex as compared to liquidation.
3. A Chapter 12 bankruptcy is for farmers, while a Chapter 13 bankruptcy, which is also known as a wage earners’ bankruptcy, is for sole proprietors, who are also wage earners.
4. It is essential that you will be honest with your lawyer, and inform him about the littlest financial detail that will support the bankruptcy case. Let him know about those things that are classified as priority debts which consist of employee benefits, child support, alimony, etc. Remember to notify your lawyer about how many creditors you have and whether they belong to secured, unsecured or partially secured creditors.
5. If you would be going for a Chapter 11 bankruptcy, you will be obligated by the court to be the case trustee (except of course in cases of fraud), and you will then become a debtor in possession. There will be an appointed committee of creditors, and a reorganization plan would be required of you to be handed in to court. If the committee of creditors approves of the reorganization plan you presented, then the court will give its affirmation. If Chapter 7 bankruptcy was your choice, then you need to submit to the court a list of your non-exempt assets, which will be sold off, and the proceeds shall be divided among creditors according to their priority.
Indeed, filing for business bankruptcy is not that simple and could get quite complicated in the process. Get hold of a lawyer who specializes in your type of bankruptcy before moving an inch. Good luck.
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