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09/08/2017 11:25 am
Bankruptcy at Chapter 7 Highlights the Two Main Goals to Leave with Something Intact
American business operations have a handful of bankruptcy options available to them. Bankruptcy is an interesting area to explore for a business because there are usually at least three core strategic options that a company can consider, but it is almost always the case that one option is better than the others. If a company explores their options deep enough, they will realize that one option will continue to rise to the surface.
The two Main Goals of Chapter 7
This option can be a chapter 7 bankruptcy. Chapter 7, as a reminder, is the full liquidation of assets. It is a dismantling of the firm, and it can be quite a feat to conclude. Chapter 7 is designed to fulfill two core goals. These are the two things a company leader can expect, and ultimately the only things they can expect.
The first is to see a sale of all assets attached to the company. The company is being dismantled, so the culmination of its physical assets, print assets, inventory, etc, are sold on paper. It is possible for a business leader to instill a plan to buy their own assets, but it is not the normal course. This is why it is valuable to hire the best bankruptcy attorney. The team can navigate the intricate details, which go above the basics outlined here.
The other matter is to settle any debts to creditors. The order of allocation in a chapter 7 will be extremely important. For example, a company may be worth less prior to the sale of assets. It may also be worth more depending on the asset valuation. When should the debts be paid to creditors? Most would assume that it is at the end of the process, and that is typically how it is done. But, payments to creditors can often be paid through and during the chapter 7 bankruptcy. If the assets sell for a low amount, it may be best to settle with debts towards the near end of the process. But, there is no demanding order of actions, and settling with creditors earlier than expected can help pay off in the long run.
These are the two things all companies under chapter 7 need to address. Getting a fresh start is the ultimate goal, but a company leader wants to leave with a little more than the shirt off their back if it is possible.
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