It is not unusual for companies to face inescapable debt. This could be due to falling profits, an underwater mortgage on a brick-and-mortar location, or as a result of overdue vendor contracts. Regardless of the reasons why a business is no longer profitable, bankruptcy remains an option for escaping out from under debt.
The owners of businesses seeking debt relief should contact a Spring Lake Heights business bankruptcy lawyer now. The experienced bankruptcy attorneys at Gillman, Bruton & Capone are prepared to perform a full financial analysis of your company to determine if bankruptcy is truly the best option. If bankruptcy is indeed your best avenue for debt relief, we can suggest the plan that works best for your business and take the mandatory steps to bring that plan to a United States Bankruptcy Court.
Filing for bankruptcy is a decision that the ownership of a business should only take after exploring every possible alternative. This is because of the profound impact that bankruptcy will have on a business, even if it is able to remain in operation.
One way in which a Spring Lake Heights business bankruptcy attorney helps is by exploring alternatives to bankruptcy. For example, a business that is trapped in an underwater mortgage for a physical location may want to consider seeking out a tax break under the Qualified Opportunity Zone. This may be possible if the property is located in special areas that need economic development. It might also be possible to negotiate a change to current contractual terms that help lower payments and avoid a potential default. Each of these options may negate the need for a bankruptcy filing.
The most common form of bankruptcy that companies pursue is Chapter 7. A Chapter 7 bankruptcy case can result in an automatic stay on all collection efforts by creditors of the business. However, this will result in the dissolution of the company.
The Bankruptcy Code empowers a trustee to take temporary control of company assets, who will then liquidate those assets and use the proceeds to pay off creditors. The benefit of this scenario is that the process results in an orderly liquidation of the business, payment of creditors in order of priority, and effectively closes the business down.
If the owners of a business wish to continue operations in the present and future, a Chapter 11 bankruptcy plan may be the solution. A goal with Chapter 11 is to remain operational while attempting to reorganize and/or obtain a discharge of company debts.
In exchange for this discharge, the company must undergo a court-supervised restructuring. This restructure can involve the sale of some assets, restructure payment of debt, closing locations, firing staff, and hiring a new board of directors. Talking with a Spring Lake Heights business bankruptcy lawyer could help you choose the bankruptcy plan that is best for you.
Similar options may be available for closely held family companies and would also include a Subchapter V, which is a more streamlined and cost-effective Chapter 11 alternative for small businesses. Additionally, if a business’s debts are sufficiently tied into a person’s finances, such as in a sole proprietorship, a Chapter 13 bankruptcy may be available. Chapter 13 allows for the continuance of a business while placing the owner on a plan of reorganization.
Bankruptcy is a powerful tool for discharging business debt and obtaining relief from creditors. However, these benefits necessarily come with a cost. In some cases, this involves the sale of assets and the dissolution of a company. In others, the company may elect to undergo a strict reorganization.
A Spring Lake Heights business bankruptcy lawyer understands this difficult situation you are in and is ready to provide support every step of the way. We help to determine if bankruptcy is necessary and offer alternative solutions. If you decide to file for bankruptcy, we provide suggestions for the plan that is right for you and submit all necessary documentation to the courts. Speak with us today to set up a free consultation.