Choose Bankruptcy or Debt Relief For Your Business?
To answer this question, you have to know what has caused the problems the business now faces and what are the prospects for change. If your business is in trouble, how do you determine if bankruptcy or debt relief is necessary or helpful for your situation?
Is the business a corporation, a partnership, or a proprietorship?
- Corporations, limited liability companies (LLC) and partnerships are legal entities separate from their shareholders or partners. They can file Chapter 7 or Chapter 11 bankruptcy in their own right.
- Proprietorships are just an extension of the business owner. They can’t file bankruptcy alone. The proprietor must file bankruptcy since the assets and the liabilities of the business are really considered one of the assets of the proprietor. The individual owner may file Chapter 7, Chapter 11 or Chapter 13, if certain qualifications apply.
Should the business be reorganized or liquidated?
To answer this question, you have to know what has caused the problems the business now faces and what are the prospects for change:
- Reorganization can’t create a market, increase gross revenue, or make up for a poor fit between the skills available and the skills required to run the business. However, reorganization could free up cash from servicing the old debt to permit current operations, permit rejection of expensive leases or contracts that are no longer advantageous or prevent the loss of vital assets or cash to creditor collection actions.
In between Chapter 7 liquidation and reorganization, a liquidating Chapter 13 or Chapter 11 could provide a breathing space for the owners to sell the business or its assets in something other than a “going out of business” sale. The funds acquired could pay taxes or unpaid salaries. Sale of the business could provide ongoing jobs for the work force under new ownership. The bankruptcy could then be converted to Chapter 7 or dismissed all together if the protection is no longer needed, conditional to all sale proceeds being paid to outstanding creditors.
To better understand all your options, please feel free to call PCS Debt Relief today and find out which is best for you. Bankruptcy can be the cause of closing your doors, but with debt relief and debt negotiations, you can still keep your business running and just deal with your debt. PCS Debt Relief can handle your debt while you focus on running your business.