Owning a business can be great, but it can also be a terrible grind sometimes, especially if you have been struggling for a while, and may need to declare bankruptcy. The world of business bankruptcy can be difficult, very complex and making the correct decisions can be virtually impossible without the right help.
What is It?
Bankruptcy is the legal process a business takes to protect whatever assets it can when financial liabilities are more than the assets and cash flow the business has. It is the process you undertake when the business is insolvent, and unable to pay creditors; the agreement you, your attorneys, and a judge agree on to settle this debt. If you are thinking of declaring bankruptcy, its time to do something business/legal themed, and quick.
When you file for bankruptcy all of your creditors are affected, including secured creditors such as the state, IRS or any other creditor who has a lien on your property, unsecured creditors such as vendors, credit-card companies or others who do not have a lien against property; creditors with priority claims and even administrative claims such as accountants or lawyers.
What Happens When You File for Business Bankruptcy
When you file for bankruptcy for your business you start a legal procedure. This doesn’t mean you will win the case, but it does put all of your creditors on hold and gives you a fighting chance. It places an “automatic stay” on the debt and stops your creditors from making further attempts to collect from you.
The Business Workout
When you declare bankruptcy and hire an attorney to help you with your case, he will most likely negotiate a “business workout” for your debt. In this non-judicial resolution, your attorney works out a settlement between your company and your creditors; this settles the debt and allows you to continue to operate. In many cases, this is a more effective and less-expensive solution for both your company and for your creditors.
Naturally, you probably haven’t ever gone through a bankruptcy process before, so you are charting in unfamiliar territory. This is why you should seek out the help of a competent business bankruptcy attorney like Rosicki legal services. Hiring a team of legal professionals can really help you negotiate the best repayment plan or bankruptcy terms for yourself and your company.
Even so, you will be required to demonstrate insolvency and the inability to cover your debts, so you must remain organized in all your record keeping, and put all the pertinent information showing your inability to pay your creditors debt in full, in your attorney’s hands.