Business Bankruptcy Law – How It Affects You
If you own a business and are considering filing bankruptcy for your business, you should consider carefully all of the consequences as well as the benefits of filing bankruptcy. Business bankruptcy law is a bit different from the laws set up for individuals, because the needs of businesses are different. This is not to say that businesses are not protected, but generally, their needs are different which is why different guidelines and rules are used.
With the different business bankruptcy law guidelines, it is important to note that the biggest difference comes in the chapters. For example under a Chapter 11 bankruptcy for a business, the business remains open. However, all of the assets and debts as well as the business plan are all exposed to the courts. Then a new business plan is developed that will allow the business to hopefully become profitable again. Once this is done, the officers of the business are still responsible for the normal daily tasks associated with running the company. However, one of the biggest changes is that all major decisions regarding finances must be cleared by a judge, or other appropriate court official.
The officers of the company no longer have the permission to buy or sell assets while the business is under a Chapter 11 bankruptcy. This is because in order to ensure the success of the business, the court wants to ensure all restructuring plans are actually appropriate and feasible considering the nature of the business. They also want to ensure that you are setting realistic goals based upon previous performance.
However, if your business is considering a Chapter 7 bankruptcy then business bankruptcy law requires that the business close and all assets be liquidated to pay off as many debts as possible. There is no way for a business to remain open once a Chapter 7 has been filed, unless the judge overseeing the case allows a petition to convert to a different chapter. While some people may feel that this would give them a glimmer of hope to improve, it is not always easy to convince a judge to approve the conversion from one bankruptcy chapter to another. Because of the specifics that are set forth in business bankruptcy law the judge's and other court officers have very little wiggle room in which to follow their wishes instead of the letter of the law. Because of how specific business bankruptcy law is, it is always a good idea to ensure that your business is represented by the best lawyer that it can possibly afford. This is extremely important if you are trying to keep your business open. A good lawyer can mean the difference between having a judge who thinks you business is in good hands, or a business that is teetering on the edge of closing. You always want to present a good, powerful, and strong image in court to keep the best interest of the company in everyone's mind. Realize that while you may feel as if the judge is out to hurt your company, they are simply following business bankruptcy laws.
| 