Disclaimer: This article should not be treated as legal advice. It’s recommended that readers still consult legal counsel and contact a lawyer should they have any concerns regarding business bankruptcy.
Bankruptcy is a big word to digest, even as a professional. Personal bankruptcy and business bankruptcy are two separate concepts with two different elements and considerations, which explains why financial professionals and legal professionals alike may advise business owners to think about these decisions very carefully.
No two businesses are the same, so your specific considerations for bankruptcy may be different. Find Law suggests that regardless if you’re a small business or not, hiring a lawyer with bankruptcy experience might be a good option for you.
Why Choose Bankruptcy?
Sometimes, it’s essential to understand all the variables involved in the situation that led you to consider to file for bankruptcy for your business. Answering this question and getting down to the factors that led you to think about bankruptcy can help you steer yourself in the right direction, especially now that we’re considering legal factors in the bankruptcy.
- After your bankruptcy, are you going to close your company for good, or are you going to operate in the future under some profitable basis? Knowing this can greatly help steer you in the direction you need when it comes to the bankruptcy.
- Are you going to file your bankruptcy because you need immediate relief for a company problem? Potential problems include garnishment, utility shut off, repossession, eviction, or even foreclosure.
What Are The Legalities?
It’s important to remember that there are different kinds of bankruptcy you could file for, and therefore multiple factors involved in any one bankruptcy filing. For instance, in a general sense, a Chapter 7 bankruptcy is best used for debt discharge plans and a Chapter 13 bankruptcy is best used for debt repayment plans; while a Chapter 11 bankruptcy more or less revolves around organizing your company. Given there are three different types of bankruptcy for your business, there are a lot of factors for you to consider. It might be best to seek guidance from a legal professional in order to assess the best move for your business.
- Consider hiring a legal professional in order to have someone that could give you valuable insight on what to expect during the entire bankruptcy process, including the legal costs.
- It’s also important to consider that you might be exposing your company to the court of law if you do push through with the process involved in bankruptcy. Privacy will become murky water in terms of a bankruptcy proceeding, and your creditors will also get to know about your company operations.
What About The Future?
It’s important to consider that bankruptcy is not necessarily a game over for your business, but that depends on the kind of plans you have in the future.
- If you do plan on continuing your business operations, try to assess the kinds of changes you have to do in order to accomplish this. Sometimes, you may need a consultant for “turning around” your staff, as your creditors may request you change your management.
- If you do want to operate in the future, consider if you have a plan that not only is realistic, but could accommodate your bankruptcy. For instance, there are certain restrictions when it comes to operating a company that is bankrupt. For instance, you may need to request court approval for things you have to do that is outside the usual course of conducting business.
Considering bankruptcy, or even applying for bankruptcy, for your business isn’t necessarily a game over. Knowing when to do this and what the legal considerations are when you have to apply for business bankruptcy can in fact be a wise move, especially if you know the kind of choices you have to make moving forward.
Cecille Cunningham loves writing for the common reader, especially on helping them make sense of various topics on the law. She currently writes for multiple law firms. In her spare time she cooks for his family and friends.