20 FebBusiness Bankruptcy Options
In America, many companies got bankrupt each month. Thousands application filed in this regard. There are two main types of bankruptcies can be filed by the companies under American law. One is under chapter 11 in which the company tries to reorganize themselves so that they can repay the loans to the creditors. The other type of bankruptcy is under chapter 7. In this type of bankruptcy, business is totally declared as bankrupt and assets will be sold to repay the creditors.
Chapter 11 Bankruptcy
In chapter 11 bankruptcy necessary steps are to be taken to revive the company. These steps include redesign the business plan and for that purpose, committees are formed. These committees carefully analyze the causes of bankruptcy and try to revive the company.
Budget Control to Avoid Bankruptcy
The owner of such businesses needed to think before going for chapter 7 or chapter 11 bankruptcies. Sometimes when debt is not a big amount, the company can revive on its own. In this case, the first thing which the owner needs to do is prepare an efficient budget in which unnecessary expenditures may be cut down. The idea is simple when someone cannot increase the income of the company he should decrease the expenditures.
Negotiating With Creditors to Avoid Bankruptcy
Another thing which the owner can do is, renegotiating with the creditors and reschedules the loans. For this owner needs a huge amount of time and efforts.
In this case, creditors also encourage that company should not go for bankruptcy because then they involved in a lengthy and time taking process of getting their money back.
Legal Advise Regarding Liquidation of Assets
As the bankruptcy process is much more complicated then it seems to be therefore, companies should hire an experienced attorney to see the legal formalities and negotiate with the authorities as well as creditors.
Corporate Debt Counseling Services
There are some corporate debt counseling services available that provide help and advice regarding budgeting and negotiating with creditors. Most of the times creditors stop using harsh recovery tactics when they feel any hope of recovering their money. However, keep in mind that those counseling services are not free. They charge a reasonable amount of money for providing their services.
It is also advisable that there are firms who provide financial advice to such companies so that they avoid bankruptcies. If a company contacted such certified and professional advisory company in time before getting totally bankrupted, they can avoid the worst situation. However, it all depends on the question that will their provided business plan works and able to take the business in an upward direction.