Author Box
Articles Categories
All Categories
Articles Resources

When Businesses File Bankruptcy

April 18, 2012 | Comments: 0 | Views: 193

The economy hasn't just been tough on consumers, but businesses are also struggling more than ever before to maintain profitability and keep their doors open. With so many high demand companies taking the plunge into bankruptcy, consumers are wondering what exactly this means for the fate of a business.

Business Bankruptcy Basics

As with personal bankruptcy, businesses have two options to resolve their debts in bankruptcy. A Chapter 11 filing allows for debts to be reorganized and repaid through a consolidated payment plan, similar to that of a Chapter 13. A business Chapter 7 is a type of elimination bankruptcy in which assets are liquidated to satisfy debts.

Chapter 11 cases are often the first line of financial defense for businesses that wish to remain in operation. By keeping the company in operation, businesses hope to be able to negotiate a debt resolution plan that satisfies creditors. In some cases, a business may liquidate some assets, sell off ownership shares, or even auction off the entire company in a sale in order to repay creditors. Generally, a Chapter 11 case keeps the majority of the business interests in tact while resolving debts. If the case is successful, the company will be able to resolve its debt liabilities and regain profitability.

A business Chapter 7 case is sought for companies that have no chance of regaining future profitability or do not wish to remain in operation. The main source of debt satisfaction in these cases is asset liquidation, in which all remaining assets are sold to pay debts to creditors. The company owners will relinquish their share in the company and ownership rights are terminated. When a company advertises they are "going out of business", they may be pursuing a business Chapter 7.

From Reorganization To Liquidation

Although many big name companies and major industry players have made headlines in recent years for their bankruptcy filings, it doesn't necessary mean bad things. In fact, many of the high profile Chapter 11 cases have been involved in successful exits from bankruptcy, even leading to better business operations and improved consumer services.

However, not all who enter Chapter 11 will prevail and some have ended up converting into business Chapter 7 cases instead. This is typically seen when a company was unable to negotiate a deal in Chapter 11 or unable to find additional sources of income or revenue as part of their filing. A lack of investors and limited opportunities for the partial sale of ownership or assets has lead many companies from reorganization into liquidation.

The Lee Law Firm is a Fort Worth,Texas bankruptcy firm that aims to provide local residents with high quality legal representation at affordable rates. Their attorneys are professional and compassionate, giving clients the personalized attention they deserve. When filing bankruptcy, the Lee Law Firm is the right choice to help in the face of financial hardship.

Source: EzineArticles
Was this Helpful ?

 
0
 
0
 
Rate this Article
 vote(s)
Feedback
Print
Re-Publish

Article Tags:

Businesses File Bankruptcy

,

Business Bankruptcy

,

Business Bankruptcy Basics

,

Chapter 11

The 3 Month Payday Loans is most suitable options for the people who do not possess assets. There are a variety of loan options for the people who are willing to pledge assets against the cash

By: Cameron white l Finance > Personal Finance l July 09, 2013 lViews: 560

For many people, bankruptcy can make their world fall apart. The apparent loss of reputation coupled with the inability to take financial decisions can deter anyone from thinking clearly. But all is

By: noragwilt l Finance > Bankruptcy Lawyers l November 18, 2012 lViews: 304

If you are availing payday loans with monthly payments, it is easy for you to obtain quick money from online lending companies.By getting the best deals of loan, you can save money in terms of

By: Malen Cheks l Finance > Loans l November 16, 2012 lViews: 289

Loans online have become the popular source of income and people can make smart decision of taking it.Now, don’t go anywhere and sit in your home silently. Such deals would bring you money without

By: Marsh Jone l Finance > Loans l November 13, 2012 lViews: 288

Loans for the unemployed would let you feel comfortable with your unstable conditions due to jobless period.If you compare the rates of a few lenders, you would definitely get the suitable lender to

By: kelse roy l Finance > Loans l November 13, 2012 lViews: 467

By taking cash advance for bad credit, it is easy for you to improve your credit status. This loan is useful to relieve financial stress. This loan is totally free from credit verification and

By: Honard Nork l Finance > Loans l November 09, 2012 lViews: 301

As experienced bankruptcy attorneys, we know that people are forced to file for bankruptcy for many reasons. Though sometimes circumstances are outside of your control (sudden unemployment, high

By: Christopher Ml Finance > Bankruptcyl June 15, 2012 lViews: 219

With the innovations caused by the development of the internet years ago, a lot has changed, specifically in the world of customer service. You can now get product information online, contact

By: Anthony Clinel Finance > Bankruptcyl June 13, 2012 lViews: 182

If your business is struggling and you decide to file bankruptcy there are several options available for your consideration. You don't necessarily need to close your business down. Understanding the

By: David Changl Finance > Bankruptcyl June 12, 2012 lViews: 203

If you are not able to fill the bankruptcy forms on your own, then you should take help from the many financial helpers in the market. However, let me tell you one thing straight. It is a good sign

By: Muhammad Azam Goharl Finance > Bankruptcyl June 12, 2012 lViews: 145

When it comes to bankruptcy, there's a lot of information you need to know. Finding all of this in one source can be difficult and frustrating for many people. You probably have a lot of questions at

By: Christopher Ml Finance > Bankruptcyl June 12, 2012 lViews: 312

According to Dave Ramsey, bankruptcy is in the top five worse things that can happen to you in a life time. It stands near divorce, illness, disability and loss of a loved one. After all bankruptcy

By: Krzysztof Wasilakl Finance > Bankruptcyl June 11, 2012 lViews: 173

As experienced bankruptcy attorneys, we know that people are forced to file for bankruptcy for many reasons. Though sometimes circumstances are outside of your control (sudden unemployment, high

By: Christopher Ml Finance > Bankruptcyl June 15, 2012 lViews: 219

When it comes to bankruptcy, there's a lot of information you need to know. Finding all of this in one source can be difficult and frustrating for many people. You probably have a lot of questions at

By: Christopher Ml Finance > Bankruptcyl June 12, 2012 lViews: 312

One of the biggest concerns people have about filing for bankruptcy is what will happen to their assets. While a Chapter 13 bankruptcy can protect assets far better than a Chapter 7, there are other

By: Christopher Ml Finance > Bankruptcyl April 27, 2012 lViews: 296

The bankruptcy process can be overwhelming at times, but it doesn't have to be. Knowing what is expected of you throughout the process can help you prepare and eliminate mistakes that could cost you

By: Christopher Ml Finance > Bankruptcyl April 25, 2012 lViews: 263

Despite popular belief, filing for bankruptcy does not damage your credit. Although there are some things to be concerned about credit-wise after bankruptcy, the risk of further credit damage is not

By: Christopher Ml Finance > Bankruptcyl April 23, 2012 lViews: 194

While there are some people who overspend and load up their debt accounts, many people have succumbed to bankruptcy over uncontrollable life situations. Loss of a job, spouse or medical condition can

By: Christopher Ml Finance > Bankruptcyl April 20, 2012 lViews: 179

Discuss this Article

comments powered by Disqus