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Suppose you have problems with your business, how determine if filing bankruptcy will be the right choice in your situation?

Depending on type of your business –corporation, partnership or proprietorship there are different solutions.

• Limited liability companies, partnerships and corporations are legal entities separate from their partners or shareholders. In their own right they can file Chapter 11 or Chapter 7. Proprietorships can’t file bankruptcy alone. They must file bankruptcy because the liabilities and the assets are really just one form of assets of the proprietor.

Reorganize or liquidate the business?

You have to know the reasons of your business’ problems and what can be changed.

• Market can’t be created with reorganization, gross revenue can’t be increased. Also it can’t make up for a poor fit between the skills available and the skills required to run the business.
• But reorganization can free up cash from servicing the old debt to permit current operations; permit contracts that are no longer advantageous or permit rejection; the loss of vital assets or cash to creditor collection actions can be prevented also.

The owner can sell the business as a going concern or its assets in something other than a fire sale.

The proceeds can pay taxes or unpaid salaries; selling the business could provide ongoing jobs for the work force under new ownership. Then they can convert bankruptcy to Chapter 7 or dismiss if bankruptcy protection is no longer needed.

Reorganization of the process with Management

With bankruptcy reorganization in Chapter 11 owners and managers need more time to comply with the requirements of the bankruptcy system, negotiate with creditors and interface with counsel.be ready,that it could be expensive.

The “bankruptcy bargain” gives an opportunity to have the protection of the automatic stay and other bankruptcy protections, but in exchange for this the debtor provides full disclosure of its financial condition to creditors and the court both at the beginning of the case and on a monthly basis thereafter, and operates as a fiduciary for its creditors while the bankruptcy is ongoing.

To participate in bankruptcy proceedings and money since the legal expenses are significant, reorganization can drain an already stressed organization of management’s time.

Lack of real plan for solving the problem, is the most popular reason of reorganization’s fail.

Could the owner start a new business after liquidation of the current business?

Some businesses may not to pay for reorganization, for example businesses that have few assets, require little capital, or are extensions of the owner’s skills and personality.

This is a difficult question that requires for professional help.

Chapter 7

When your business has no future, no substantial assets or qualities that cannot be reproduced after bankruptcy or the debts are so overwhelming that restructuring them is not feasible – a chapter 7 may be the best choice.

Individuals can get a chance to start over and get a discharge of the dischargeable debts.

Corporations can’t get a fresh start in a Chapter 7, because they don’t get discharges. But remember that orderly liquidation under the direction of the trustee and at no expense to the shareholders can be provided by a Chapter 7.