Many business owners considering bankruptcy find it difficult to decide whether they should reorganize their debts Chapter 11 bankruptcy or liquidate their debts in a Chapter 7 bankruptcy
Questions You Should Ask Before Filing Chapter 11 Bankruptcy
Below are a few questions every business owner should ask before they file Chapter 11 bankruptcy:
Is My Business Viable?
Oftentimes businesses run into financial problems because they are running on faulty business plans or their industry is permanently contracting. Business owners considering Chapter 11 bankruptcy need to answer this question honestly because if the business is not viable filing a Chapter 7 bankruptcy may be a better option.
Are my Creditors Flexible and do They Have Faith in the Viability of My Business?
Creditor cooperation is essential for success in Chapter 11 bankruptcy. If you have creditors who simply want to liquidate your assets in Chapter 7 bankruptcy, then it may be a long and difficult Chapter 11 bankruptcy process because you will need to convince them and the bankruptcy court that your business can indeed survive.
Can This Business be Sold?
Sometimes debtors use bankruptcy to sell their business and rid themselves of the debt and responsibility that comes with running that business. If your business has enough valuable assets you may be able to sell the business in bankruptcy. The buyer could be your creditors or a third party; however, the sale would need to be approved by the bankruptcy court.
How Will This Business Bankruptcy Impact my Personal Finances?
Many business owners have personal and business finances that are intertwined. If this is the case, work with your bankruptcy attorney and maybe an accountant to sort through the confusion and create a strategy for protecting your personal assets.