The United States Bankruptcy Code is designed to help businesses either restructure existing debts or windup operations and liquidate assets. If a company has ceased operations and is attempting to wind-up its affairs, a Chapter 7 bankruptcy may make good sense. Here, a bankruptcy trustee will be appointed to marshal and liquidate remaining business assets. While the process may take several months to complete, most of the work involved in liquidating the assets is undertaken by the bankruptcy trustee. This allows the principals the ability to quickly move on to new ventures. Further, due to the formality of the process, there is reduced risk that a creditor will claim to have been shortchanged or cheated by the liquidation process. This may help avoid unnecessary litigation and cost.
If the business expects to continue operations during and/or after the bankruptcy, then a better option may be a Chapter 11 bankruptcy. Often called a “Reorganization Bankruptcy,” a Chapter 11 is designed to give the business time to catch its breath and develop a plan of reorganization that will allow the debtor business to continue operations and pay its obligations over time. Chapter 11 bankruptcies are customized to fit each client’s unique situation and needs. Generally, the debtor business is permitted to continue operations without a trustee being appointed. This allows the principals to retain control of business assets and operations while working for the benefit of all interested parties. Done successfully, a Chapter 11 can make all the difference between a successful future and no future.
Speckman Law Firm has helped many businesses with both Chapter 7 and 11 bankruptcies. As a CPA and holding both a JD and MBA degree, Mr. Speckman has the business experience and expertise to help businesses maximize the benefits accorded by the United States Bankruptcy Code and to help you weather the storm. Contact us today for a free confidential consultation with Mr. Speckman