Bankruptcy is a federal, court-supervised procedure that gives individuals and businesses an opportunity for a “fresh start.”
Businesses bankruptcy offers financially struggling businesses a solution through two primary avenues—business liquidation or business reorganization.
Business liquidation is done through a Chapter 7 bankruptcy petition and usually signals the conclusion of the business. Business reorganization is accomplished through a Chapter 11 bankruptcy proceeding and is best designed for businesses that plan to continue operating and could return to profitability upon restructuring. If you are a sole proprietorship, you may be eligible to reorganize under a Chapter 13 bankruptcy proceeding.
Business owners should consult with a competent bankruptcy attorney before deciding which avenue of bankruptcy to pursue. On this website you will find a list of experienced business bankruptcy law firms that can help you determine the best fresh start option for your business.
A Business Bankruptcy Overview: What Type of Bankruptcy Makes Sense For My Business?
I want to close up shop & limit potential lawsuits from my business’s creditors.
- Under Chapter 7, a business liquidates its assets to pay off the creditors. A Chapter 7 Liquidation discharges a majority of the business debt and is a common option for businesses in financial trouble that are seeking to close down.
I want my business to get a handle on its debt & to keep the doors open.
- Under Chapter 11, your business goes through reorganization while simultaneously following a plan to repay the business creditors. A repayment plan that is “confirmed” or approved by the court usually allows your business to repay a portion of its obligation and discharge others. Pursuant to the goals of Chapter 11, the court encourages creditors to work with you to keep your business open. This process helps you, the business owner, to get a handle on the business’s debt, while planning for future profitability.
I am a farmer or a fisherman facing financial troubles.
- A Chapter 12 bankruptcy is specifically for our farmers and fishermen. This route of business bankruptcy takes into consideration the distinct challenges faced by farmers and fishermen running their business. Chapter 12 is an easier and less expensive bankruptcy option that provides for court-supervised repayment of creditors.
I own a foreign company, but do business in the U.S.
- Chapter 15 makes it possible for foreign business bankruptcies to be recognized and honored in the United States. If your company has declared bankruptcy internationally, a U.S. judge can enter an order to honor that bankruptcy under Chapter 15.
For more information, please contact one of our business bankruptcy law firms.