Bankruptcy for businesses
Individual insolvency is scary; however, business owners can also be faced with the stress of trying to keep their business afloat and their employees paid with unmanageable debts. In these situations, the Bankruptcy Code can provide some relief.
A business owner has two real options. First, like an individual, they can apply for Chapter 7 bankruptcy. This solution will provide the fresh start that debtors crave. However, this requires the liquidation of significant assets, and that may not be the option a dedicated business owner wants.
On the other hand, businesses are given the opportunity file a Chapter 11 bankruptcy. Several key features of this include the debtor, usually, remaining “in possession” with he powers and duties of a trustee. The debtor may continue to operate the business, and may, with court approval, borrow new money.
The main focus of this chapter is to allow the debtor to reorganize and to keep its business afloat while. To get started, a debtor needs to provide their attorney with a 1) schedules of assets and liabilities; 2) a schedule of current income and expenditure; 3) a schedule of executory contracts and unexpired leases; and 4) a statement of financial affairs.
A Chapter 11 bankruptcy can seem complicated on its face. However, legal advice can cut through the confusion and help to mitigate the stress of mounting debts.