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Do money woes mean your company has to file for bankruptcy? Not necessarily: corporate bankruptcy and a business workout are generally both options that can help your business resolve your insolvency issues.

Debating a bankruptcy filing can be one of the hardest decisions a business owner will ever make. With mounting debts, it can be hard to see how your company will ever overcome its financial woes. But there are almost always at least two options when your company is bordering on insolvency: corporate bankruptcy and a business workout.

Business Workouts

This bankruptcy prevention strategy can help you settle with creditors outside of the courtroom. These non-bankruptcy solutions involve working with your creditors to resolve your debts and enable the business to continue in operation. Including options to renegotiate and reorganize debt, business workouts can help your business regain liquidity without a costly, drawn-out bankruptcy filing.

If you’re wondering why creditors would be willing to renegotiate debt, the answer is simple: money. Bankruptcy proceedings ensure that many of your creditors get some repayment of the debt owed, but most creditors generally take a major hit. With a workout, they’ll likely receive payment on a greater portion of your debt. So instead of being unenthusiastic about renegotiating your company’s debts, your creditors are likely to be eager to participate in debt restructuring. It’s their best bet for having their debts fully satisfied!

Corporate Bankruptcy

However, if your creditors refuse to compromise and your debts have become completely unmanageable, corporate bankruptcy may be your only option. Depending on the organization and structure of your business, there are several options available for business bankruptcy. Filing a Chapter 7 bankruptcy results in the liquidation of your company, selling off assets to satisfy your debts. Filing a Chapter 11 bankruptcy involves restructuring your business to regain profitability and settle with creditors. Some assets may be sold off during this process, but the company will not be liquidated. To determine the most appropriate type of bankruptcy filing for your business and your particular financial situation, you’ll want to consult an experienced bankruptcy attorney. Keep in mind that for small business owners, a business bankruptcy will affect your personal finances, so it’s best to avoid it if at all possible.

With debts piling up, it can be hard to know if or when to file for bankruptcy protection—that’s why you need to call Ganje Law now. We can offer you expert advice on what’s right for your business, so don’t wait! Contact us today.

Corporate Bankruptcy: When Should a Business File for Bankruptcy?

When your company is facing money problems, it can be hard to know when to file for bankruptcy. Consulting with an experienced bankruptcy lawyer can help you determine if your business must file for Chapter 11 or Chapter 7 bankruptcy.

In the current economic climate, more and more businesses are suffering from increased financial stress. When your debts are piling up, it can be hard to decide if or when to file for bankruptcy protection. Here is a brief overview of the issues surrounding bankruptcy, but you should always consult with a professional bankruptcy attorney prior to making any decisions regarding a bankruptcy filing.

The simple answer is, try every other solution before filing for bankruptcy. Even if your company is overwhelmed by debts and creditors, there may be non-judicial resolutions available. Financial restructuring and workouts can help you satisfy your debtors without having to file for bankruptcy. In fact, simply letting your creditors know you’re considering bankruptcy may be incentive enough for them to come to the bargaining table! These types of bankruptcy prevention strategies create a compromise solution between your company your business debtors. The end result is a negotiated partial repayment whereas a bankruptcy would likely result in the creditor getting nothing. Workouts and debt restructuring are a way of resolving your debts without the hassle, cost, or embarrassment of filing bankruptcy.

For small business owners, a business bankruptcy can also impact your personal finances. In partnerships and sole proprietorships, you can be held personally liable for your company’s debts, and your assets can be used to satisfy your creditors. Obviously, in these cases, you’ll want to seek every possible alternative to bankruptcy in order to safeguard your personal property. Additionally, filing for bankruptcy will likely make it harder to start a new business in the future. Not only will you have depleted assets, but the social and financial stigma of bankruptcy may also be a problem for you.

However, if your debt problems can’t be resolved any other way, bankruptcy protection may be your only option. Depending on your company’s structure, there are a number of different options available for corporate bankruptcy. In order to determine the most appropriate type of bankruptcy for your business, you’ll need to consult an experienced bankruptcy attorney. In fact, if your debts are mounting, you may want to speak with a bankruptcy lawyer before the situation becomes truly dire. He or she may be able to help get your company turned around from the brink of disaster with knowledgeable advice and guidance.

If you’re considering business bankruptcy, take control of your circumstances by contacting a bankruptcy professional today!

Author: Peter Gitundu

Bankruptcy can happen as a result of your own fault or it could be as a result of genuine financial crisis that was otherwise not anticipated. By your own fault I mean, it could be due to carelessness in handling your money, or even operating your life or business without a clear budget.

Whatever the reasons could be, it is quite important to realize that there will be consequences which you will have to face and live with. When it comes to business bankruptcy, probably the most obvious consequence is that you will have to close down your business and have your employees dismissed.

However, this is subject to the chapter under which you file your insolvency petition. In most cases this will happen under chapter 7, which is also known as the liquidation chapter. If you file under chapter 13, you will have the chance to reorganize your finances and come up with a repayment plan as you continue with business.

If you are file for bankruptcy while in a partnership, the partnership will more likely than not be dissolved. This is unless the partnership deal that you signed provides otherwise. If there happen to be any loans that your partners had cosigned with you, they may be forced to pay up on your behalf. Once you have filed for insolvency, it may prove hard for you to start a back-up business as your name will remain in the insolvency records for a period not exceeding ten years.

About the Author: Peter Gitundu creates interesting and thought-provoking content on finance.

Article Source: http://www.articlesbase.com/personal-finance-articles/consequences-of-business-bankruptcy-912099.html