When a business is struggling to stay afloat due to mounting debt, it may be time to consider filing for bankruptcy. Believe it or not, bankruptcy can be the first step on the road to the financial success of the business. Businesses have a few options when it comes to bankruptcy, depending on the financial situation that the business is in.
Chapter 7 Business Bankruptcy
When a business is struggling financially and feels as though debt restructuring is simply not practical, it may have to turn to a Chapter 7 liquidation bankruptcy. Though this option typically results in a business closing down, it can allow the business owner to close the business without the headache of remaining debts. A Chapter 7 bankruptcy may be beneficial for businesses that have more debt than the business is actually worth. If a business has no potential to make a profit, liquidation may be the best option.
Chapter 11 Business Bankruptcy
When businesses are struggling financially but still have assets that have a greater worth than the amount of debt the business is faced with, they may want to consider filing for a Chapter 11 business bankruptcy. Chapter 11 allows a business to reorganize, get rid of some overhead, and come up with a plan that will allow the business to pay off a portion of their debts over the course of 5 years. This option allows the business to stay open and continue bringing in revenue.
If your business is struggling financially, it is important to discuss what options may be best for you with an experienced bankruptcy attorney.
Matters related to bankruptcy and estate planning are very significant in one’s life and require the services of an experienced attorney. Our firm proudly serves clients throughout Rockland County and New York State. If you need effective legal guidance, contact Koplen Law today to schedule a consultation.