A business that can’t pay off its bills on time due to poor cash flow may consider bankruptcy. The US Bankruptcy Code provides some special laws that cover businesses that can’t repay debts. Just as a consumer files bankruptcy when he is not able to pay back debts, a business can do the same in order to get rid of the liabilities and start afresh. When a business files bankruptcy, the judge immediately appoints a trustee to look after the finances of the business during bankruptcy and the debt collectors are prevented from asking for any payment. Bankruptcy can eliminate the debt of a company and it can also give a business an opportunity to reorganize and get back to normalcy.
Chapter 7 bankruptcy – Where businesses can cancel debts
Chapter 7 is that form of business bankruptcy that cancels most commercial debts. Under this Chapter, the business requires selling off its assets and repay as many bills as it can. The debt collectors need to be paid in the right order. In case there is not much money for repaying all of them, the judge may even cancel bills that are left over. This Chapter is common for those businesses that can’t pay their creditors and want to wind down their business.
Reorganization offered through Chapter 11 bankruptcy
Chapter 11 bankruptcy is for all those businesses that are definitely going through dire financial straits but are not willing to close down altogether. Through this Chapter, a reorganization plan can be approved by the judge. While some bills are cancelled, others can be reduced or paid late until the business gets a chance to restructure and reorganize.
Dealing with business bankruptcy – Choosing a qualified attorney
When you decide that bankruptcy is the online option for you, you will have to deal a lot and this sometimes is not possible on your own. You need to get help of an attentive lawyer who can negotiate bankruptcy and satiate all the parties.
When you may require a business bankruptcy attorney?
As soon your business files bankruptcy, the judge will impose an “automatic stay” that will prevent all creditors and debt collectors from demanding any kind of payment from you. Your creditors may even file motions requesting the court to lift the automatic stay and dismiss the entire case. In order to deal with such cases, you will need the help of a qualified lawyer.
How to find a bankruptcy attorney and what are the fees associated?
If you know some business owners who have filed bankruptcy protection, you may ask for referrals. However, make sure you call each lawyer and ask him about the kind of law he or she practices. Most attorneys will want you to pay up front but if you’re going through a tight situation, they might put you in a different situation. Ask him if he allows paying in installments.
Hence, if your business is going through a tough financial phase and you consider winding down, you may take into account the above mentioned information on business bankruptcy. For more information on lawyers, you may check out Bolinske Law, LLC.