Tips To Keep In Mind When Filing For Business Bankruptcy
As a business owner, filing for bankruptcy is of course the very last thing you would ever want to do. But sometimes things don't go your way and you need to have a plan to either get your business back on track or protect yourself legally and financially if it should come to that. These are both reasons why you might want to consider filing for a business bankruptcy. This process could be confusing though if you've never gone through it before. Here are some tips to help ensure that you can file for business bankruptcy and get your life and possibly your company back on track.
What Kind of Bankruptcy Do You Want to File?
Just like when filing for personal bankruptcy, you have multiple options available to you when filing for your business. The two most common types of business bankruptcy filings are Chapter 7 and Chapter 11. Chapter 7 typically results in a liquidation of all assets, which are then used to pay off some of your debts. Chapter 11 is more typically a reorganization of the business in order to both pay off debt but also to come up with a plan to get back in the black.
If you don't think your business can be saved at this point, you are most likely going to file a Chapter 7 and begin liquidation. A Chapter 11 may allow you to reorganize and start moving forward, but keep in mind that your future business plan will need to be approved by the court and possibly your creditors or investors.
There are other options for filing besides Chapter 7 and Chapter 11, but they are typically for more niche cases like filing a Chapter 12 for your family-owned farm. A bankruptcy expert may be able to help figure out the best path forward if going with Chapter 7 or 11 does not feel right to you.
What Message Are You Going to Give Your Employees and the Public?
If you intend to go with a Chapter 11 bankruptcy and intend to reorganize the business in order to potentially stay in business, keep in mind that you will have to sell this to both your creditors and, of course, make sure your employees and staff buy into the plan. Talk to your PR team or someone with previous experience with bankruptcy messaging in order to ensure you are getting the right message out there.
Don't Move Forward Without an Attorney
Contact a business bankruptcy lawyer today. They can help you figure out the right type of filing and can likely share best practices to get you on the road to success.