Corporations filing for bankruptcy protection have options open to them that can help to relieve the major portion of their burden of debt and help to keep the company on its feet. In this short article we will look at how companies filing for bankruptcy protection can go thru the courts and still keep their doors open to the general public, even if bankruptcy protection is selected.
It seems that many firms are now filing for bankruptcy protection these days. It is wise to remain informed on your options when considering taking a visit to the court system. To keep from losing more than they need to under a suit, firms filing for bankruptcy protection have to choose from Chapters, or filings. They must do this to rather satisfy their lenders and keep from being shut down.
Companies filing for bankruptcy protection can select between Chapter 7, Chapter 11, and under certain circumstances, Chapter 15 if the businesses concerned are operating internationally. If not, then Chapters seven and 11 will apply. The Chapter 7 form of debt discharge will be considered “abusive” under the new bankruptcy laws if the debtor has over a certain quantity of monthly income. Chapter seven discharge is to be considered a “last ditch” resort for those who are in the deepest Problems with debt and there are absolutely no other alternatives. This isn’t the case. A successful petition under Chapter seven will make the stocks of the company of no value and the speculators will also lose their money. An individual that owns a business that is unincorporated may use a Chapter thirteen petition.
Firms filing for bankruptcy protection who want to remain open for business can do so using the Chapter 11 form of debt discharge. Generally this could take care of the reasonable satisfaction of creditors and still allow the business to stay open. This plan, or form of debt discharge is a reorganization or redistribution of debt for the debtor. Creditors are permitted to file this form of petition in the courts against a debtor. When the creditors file such a petition it is known as an “involuntary petition” for plain reasons. The courts will require a fee to file this petition. All liabilities, assets and business affairs of the debtor will be considered. This is to permit the creditors to make an educated call about the debtor’s plan of reorganization. A Chapter 11 form of debt discharge does not put the backers at private possibility of losing their investments, except for the resulting dropped price of the company’s stock. Companies filing for bankruptcy protection should look very closely at using the Chapter eleven petition as it is usually the most advantageous for everyone.
corporations filing for bankruptcy protection in the United States should familiarize themselves with the united states Bankruptcy Code. It is in Title 11 of the united states Code and is likely available at the local library.
If you would like more information about corporate or business bankruptcy options, please contact our office and speak to a bankruptcy attorney.