Corporate And Business Bankruptcy
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While bankruptcy filings declined in 2006, according to the Administrative Office of the United States Courts, more than 1,000,000 individuals, companies, and businesses still will file for bankruptcy each year. The economy is in turmoil and companies are now being bailed out by our government, and devising means of halting the financial downfall have been many, but to little avail.
The simple definition for bankruptcy is the legal inability to pay debts. While this definition sounds simple enough, corporate and business bankruptcy is not. There are several different types of bankruptcy, including Chapter 7, Chapter 11, Chapter 13, Chapter 9, Chapter 12, and Chapter 15. Companies and businesses typically utilize Chapter 7 or Chapter 11.
If a company or business files for bankruptcy under Chapter 11, the debtor company or business is granted the chance to reorganize the business and attempt to become profitable again. Additionally, the company or business is allowed to operate on its own, using its own employees or staff for day-to-day functioning and activities. In some cases, the court may assign an overseer to the company. In these cases, it is mandatory that the company consult with the overseer for major financial decisions.
In some instances, a company or business has absolutely no hope for recovering. In this scenario, the company or business will file a Chapter 7 bankruptcy. This means that they will have to stop all operations and go completely out of business. During the Chapter 7 bankruptcy process, the court will appoint a trustee who will be in charge of liquidating all of the company\'s or business\'s assets. Once all assets are liquidated, the trustee distributes the money to creditors and investors.
Because there are so many laws, rules, and provisions involved, if you own a business and are considering filing for bankruptcy, it's best to contact a bankruptcy lawyer or attorney. A bankruptcy lawyer will know the ins and outs of the legal system, be able to explain the different types of bankruptcy, and advise you on which one is best for you.
Most publicly held companies prefer to file under Chapter 11 rather than Chapter 7, because they are still able to run their business and control the bankruptcy process. Chapter 11 provides a means for rehabilitating the companies failing business. Sometimes the company triumphantly works out a way to restore profitability, and other times the resolution is to liquidate.
Ownerships that have filed for Chapter 11 are able to once again create new businesses once the previous one has been liquidated. Some companies may be tempted to use the same name, but that would be a bad idea. Using the same name as the previously liquidated business can cause confusion and also tag the business by having it unfairly listed in credit reports.
Additionally, an experienced bankruptcy lawyer or attorney can help you understand bankruptcy laws and your legal rights, and they can help you with your claim from beginning to end.
Business bankruptcy lawyers often meet many clients who have started businesses in the hopes of becoming profitable. However, unforeseen circumstances arise, and sometimes those businesses are overrun with debt. Instead of allowing things to get progressively worse, consider filing for bankruptcy to get the relief that you need. Visit the American Bar Association (ABA) to contact a business bankruptcy lawyer, and explore your options for debt relief. The ABA features a lawyer locator, which allows the user to search bankruptcy lawyer profiles in your local area. Access to the site and profiles is free.
Legal•Info State Bankruptcy Information
Legal•Info State Resources
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