Business Bankruptcy Options

Sometimes, especially in this economy, there seems to be no choice for a business but to file for bankruptcy.  After it has explored all of its options, perhaps even trying a few, it reaches the sad conclusion that it has no other choice, then the company should look to filing for bankruptcy.  However, a company should educate itself about all aspects of business bankruptcy in order to make sure they are doing the best thing and are filing the right type.  They should contact an attorney so that all of the proceedings are conducted properly and nothing is left to chance.  Making the right choices about bankruptcy can have a positive impact on the future of the business, can help the business avoid other legal action, and assist it in emerging from bankruptcy reorganized and ready to be rebuilt.

            One article I found gives some good background information on bankruptcy.  The article, About Business Bankruptcy by William Pirraglia offers some basic information about business bankruptcy, and is a good starting point for gathering information.  Bankruptcy in the United States, which was meant to provide both businesses and individuals a fresh financial start, began in 1800, but has undergone several major changes over the years, with the version we use today being made law in 1898 with the Nelson Act.  There have been several more changes in this and the last century to finally arrive at what laws we have today.  Many people have the misconception that a business that files for bankruptcy will simply disappear, never to be seen or heard from again.  While this does happen to some companies, most will emerge from bankruptcy reorganized, and ready to do business again.  Filing for bankruptcy protection can allow a company to not only get a handle on its financial troubles, but it can then emerge as a better company than before.  The complete text of this article can be found at http://www.ehow.com/about_4568082_business-bankruptcy.html/.

            Another article I found, Small Business Matters:  Bankruptcy Options for the Small Business Owner by Jennifer D., gives more information about the types of bankruptcy available for businesses.  The first type is a Chapter 7, or liquidation, where all of a business’s assets are sold off and the proceeds distributed to its creditors.  This type basically ends the business; there is no provision for reorganization and is most appropriate for sole proprietorships and small businesses.  The next type is a Chapter 11, and is filed for when a business has a plan for future recovery.  It is a very complex process, and the business can expect to be watched very closely afterwards.  The third type is a Chapter 13, where the business files a repayment plan with the bankruptcy court.  From this type of bankruptcy, a company can emerge, and it also protects personal assets if they are tied into the business.  The final type of bankruptcy covered by the article is a Chapter 12, which is designed for use by family farmers.  In this type of filing, a business proposes a repayment plan to its creditors that covers three to five years.  The complete article can be found at http://community.sba.gov/community/blogs/community-blogs/small-business-matters/bankruptcy-options-small-business-owner/.

            As with anything, the more you know about something, the better off you will be.  By knowing what types of bankruptcy are available for businesses, you can make an informed decision that can have a positive impact on your future business activities.  Business bankruptcy does not have to mean the end of a business, it can be used to help the business emerge stronger than it was before.  Of course, an attorney should be retained by the business to advise it of its options and to correctly perform all of the tasks necessary to file.  Business bankruptcy does not have to be the end of the world, but the more that is known about it, the better off the business can be.