Five Things to Know About Business Formation and Bankruptcy
A San Francisco Bankruptcy Attorney lists Five Things to Know About Business Formation and Bankruptcy...
The current economic affairs are affecting more than just individuals unable to meet their debt obligations. Large and small business alike are also suffering and turning to bankruptcy in order to emerge with a viable option for keeping the doors open. Business formation and bankruptcy is becoming increasingly common in California and across the nation. Although chapter 11 is the most common chapter in which business file under, it is not the only available option. Chapter 11, however, is the only chapter which allows for business to reorganize its debts and business structure.
Business formation and bankruptcy will allow the business to remain in operation. While bankruptcy will often require new accounts to be opened in order to separate pre-filing debts against post-filing expenses, it is possible to continue with buying and selling in the normal course of business.
Employees are not automatically fired. Businesses thinking about business formation and bankruptcy do not have to cut payroll employees in order to be successful. Part of remaining open during the reorganization process means retaining employees to perform the day to day tasks of the business.
Businesses can also reduce the amount of debt owed and stretch out payments in order to make obligations easier to meet. Restructuring businesses finances in bankruptcy often allows for the outstanding balances to be repaid at a reduced rate over an extended period of time. For example, in General Motors chapter 11 filing, part of its plan was to phase out several unsuccessful departments, using the money from liquidation to repay creditors.
Business formation and bankruptcy also allows for restructuring. To use the General Motors example again, GM split into a “new GM” and an “old GM” and dealt with its assets and liabilities according to whether departments were going to remain in business or whether the programs were going to be eliminated.
Last, as with all bankruptcy filings, businesses also are entitled to the automatic stay that goes into effect when the bankruptcy petition is filed. This is important because it allows business owners some breathing room when dealing with creditors attempting to collect on outstanding debts. The stay stops all current lawsuits and prohibits the filling of new lawsuits or other action until the bankruptcy is complete.
If you have questions regarding bankruptcy in San Francisco or bankruptcy in the greater Bay Area please contact our San Francisco Bankruptcy Attorneys at (415) 946-8882 for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced San Francisco Bankruptcy Attorneys. After you have spoken with one of our Bay Area bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Bankruptcy Lawyers, Bankruptcy Customer Care Specialists and Bankuptcy staff supporting San Francisco and Bay Area consumers in debt can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Francisco Bay Area!
