In the event a business workout is infeasible or unsuccessful, a business bankruptcy may be the only means of preserving the value of the business for sale, or of forcing its creditors to accept a debt reorganization plan. While we prefer to solve business financial problems outside of the bankruptcy court context, circumstances including being sued, the bank freezing or refusing to renew a line of credit, and account levies by taxing authorities, can leave a business with no other option than a bankruptcy filing to regain some financial control.
Some advantages of business Chapter 7 and 11 bankruptcies follow:
- Stop collection and other expensive litigation
- Reject and renegotiate unfavorable lease and other contract terms
- Renegotiate terms of secured financing
- Recover involuntary and voluntary payments for redistribution to creditors whose claims may be guaranteed by officers of the business
- Stop a forced liquidation and buy time to sell the business on the open market for its going concern market value
- Negotiate new credit terms with critical trade creditors and suppliers while repaying old payables over an extended period of time
- Reject unfavorable collective bargaining contracts
- Stop foreclosure and involuntary receiverships
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HANSON & PAYNE, LLC
Chapter 7 and 11 Business Bankruptcies
