Tests For Financially Struggling Small Businesses

  • Small Businesses

Tests For Financially Struggling Small Businesses

Call: 888-297-6203

The most difficult decision for a small business owner facing bankruptcy is whether or not the company has a future.

You need to establish the following facts in order to go forward:

  • What led to the issues the company is currently experiencing?
  • Exist any chances for improvement?
  • Can bankruptcy lead to change?

Reorganization restrictions

Reorganization cannot establish a market, boost gross sales, or correct a mismatch between the talents on hand and the ones needed to operate the firm.

Reorganization could allow for the rejection of leases or contracts that are no longer advantageous (such as an expensive facility lease or an unnecessary equipment purchase), free up cash from servicing the old debt to fund current operations, or stop the loss of important assets or cash to creditor collection actions.

Bankruptcy for quite a prompt sale

A Chapter 13 or Chapter 11 reorganisation might provide the owners some breathing room to sell the company as-is or to liquidate its assets in a different manner than a fire sale.

Taxes or outstanding wages might be paid using the money. If the company is sold, the workforce might continue to work there under new ownership. If bankruptcy protection is no longer required, the bankruptcy might then be changed to Chapter 7 or discharged. The court will presumably require that the sale profits be paid to the creditors before dismissing the lawsuit.

Think about restructuring

Does management want to participate in the restructuring process and does it have the necessary resources? The owners and management must devote a lot of time to the Chapter 11 bankruptcy restructuring process in order to meet all legal criteria.

The “bankruptcy bargain” stipulates that the debtor must function as a fiduciary and give full disclosure of its financial situation to creditors and the court at the beginning of the case and on a monthly basis thereafter in exchange for the automatic stay and other bankruptcy protections. Legal fees are expensive. Most reorganisations fail, typically because there isn’t a solid strategy in place to address the issues.

Is the company one that the owners may restart when the existing one is dissolved? It might not be worthwhile to reorganise businesses that have little capital requirements, minimal assets, or are essentially just extensions of the owner’s abilities and personality. It could be wiser for the owners to liquidate the company, in or out of bankruptcy, and start anew as a new organisation.

If you are around Los Angeles or Texas, you can consult a renowned firm named Recovery Law Group who can help you with all your issues related to Bankrupcy, You can get in touch with them using this phone number – (888-297-6203) or the link https://www.recoverylawgroup.com/bankruptcy/

To handle this appropriately, which can be a difficult matter, you should seek competent expert counsel. Considering hiring a bankruptcy attorney.

 

When to use Chapter 7

When filing under Chapter 7—whether as an individual or a business may be the best option

The company has no future, no significant assets, no distinguishing characteristics that cannot be duplicated, or its debts are too great to be restructured. Individuals are given the opportunity to start afresh and a discharge of their excludable debts.

Corporations are not exempt from bankruptcy, but a Chapter 7 bankruptcy can offer an orderly liquidation under the trustee’s supervision and at no cost to the debtor. Creditors are guaranteed payment in accordance with the amount of accessible assets and the priority of their claim.


    2022-09-12T07:50:30+00:00