For some people, owning and running a business is a dream-come-true. Corporations, partnerships, and limited liability companies are all types of companies that a person can run. These entities are separate from their owners or the shareholders. However, there are times when the business gets in trouble financially. In such a situation, the business owners are supposed to file a bankruptcy for the entity.
If a business has a large amount of debt, it can file for protection which requires the services of a lawyer. At such a time, the debtor is allowed to operate as a "debtor in possession." This means that they can still be in control of the business operations and undergo financial restructuring while trying to pay the debt. This could either be in the form of accepting loans from new lenders or getting rid of all the unfavorable contracts.
When the bankruptcy process begins, the automatic stay is appealed. The business is protected from all the creditors who would be trying to collect money from the company. The process could take months, or even years depending on how complex the case is and how much debt the business has. Filing business bankruptcy is better than filing personal bankruptcy because the personal assets of the owner are not taken away to repay the business debt. Therefore, the creditor cannot interfere with their finances and bank accounts. Besides, the business owner has an opportunity to liquidate the current entity and start a new business that is free from debts.
In case your business is facing some bankruptcy issues, you can contact our legal center. Lawyers have vast experience in business bankruptcy. Let us help you manage your debt and get control of your organization again.