While some attorneys say you should close a business rather than file bankruptcy, I disagree. I believe you should file a bankruptcy to “stop the noise.” A Chapter 7 bankruptcy will make it difficult for a business to survive and will lead to the business closing at the end. A business may not file a Chapter 13 bankruptcy, as it is strictly reserved for individuals with regular income. A Chapter 11 bankruptcy is a great way for a business to reorganize, and to continue to operate without the pressure from the creditors. It helps the business make a plan to pay certain debts, whether a portion or the entire debt, over a period of time (usually less than 5 years). This can offer a business the opportunity to get back on its feet while continuing to operate.
What Things Should A Company Be Mindful Of When Considering A Bankruptcy Filing?
The first thing a company should do is determine whether there are alternatives to bankruptcy. If the creditors are not putting much pressure to have their debts paid, the company may be able to work out a deal with them without needing to file for bankruptcy. However, if there is heavy pressure from the creditors and no chance at alternative settlement, bankruptcy may be a good option.
The next thing that must be identified is who is in charge of making such a decision. For example, they may have to put it to a vote with the stakeholders, partners, or other people who have a say. If there is a single owner, that person can obviously make the decision on their own. Next, the company must consider its standing regarding all required tax filings, as they’ll want to demonstrate that all taxes are paid and taken care of, or else they must be paid during the case.
For more information on Filing A Small Business Bankruptcy in Virginia, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (540) 788-2273 today.