Business bankruptcy is useful in two situations; the first, Chapter 7, is used when a business is shutting down and liquidating its assets; and the second, Chapter 11, is used when a viable business needs some time and space to restructure its affairs so as to continue in operation.
Chapter 7 bankruptcy is often used when a company goes out of business and its owners want assets liquidated in a structured way. When a business files Chapter 7, a bankruptcy trustee is appointed by the court. The trustee assumes control of the business, collects remaining receivables, and liquidates assets.
Chapter 11 bankruptcy allows a business to remain in control of assets and business operations. It is available to virtually all businesses, regardless of whether they are small sole proprietorships or large, publicly held corporations. Chapter 11 gives a business the time to restructure the business with relief from creditors. Once such restructuring occurs, companies emerge from bankruptcy and repay a substantial portion of their debt.
David P. Lloyd has represented business clients in Chapter 7 and Chapter 11 cases for decades and can help you choose the appropriate form of bankruptcy for your company’s unique financial situation. The Law Offices of David P. Lloyd are a debt relief agency. Mr. Lloyd helps people file for bankruptcy relief under the Bankruptcy Code.