Corporate And Business Bankruptcy
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 will still file for bankruptcy each year.
The simple definition for bankruptcy is: the legal inability to pay debts. While the definition sounds simple enough, corporate and business bankruptcy is anything but. Keep in mind that 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 many cases a company or business has absolutely no hope for recovering. If this is the case, the company or business will file a chapter 7 bankruptcy. This means the company or business 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 the company or businesses’ assets (all of them). Once all assets are liquidated (turned onto cash), the trustee distributes the money to creditors and investors.
Because there are so many laws, rules, and provisions involved, if you’re 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, they will be able to explain the different types of bankruptcy, and also advise you on which one is best for you.
Additionally, an experienced bankruptcy lawyer or attorney can help you understand bankruptcy laws, your legal rights, and they can help you with your claim – beginning to end.
If you are ready to contact a bankruptcy lawyer to explore your options for debt relief, visit the American Bar Association ( ABA ). 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.
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