It’s an unfortunate fact that a large majority of small businesses do not survive for more than a year after they are start. Many businesses start with big dreams but very little planning, and the business owners do not understand the market for their products or services or they may not have the money or the drive to build its success. This often means that it won’t be long before the difficult decision about filing for bankruptcy has to be made.
Which Type of Bankruptcy Should My Business File?
A business can be a sole proprietorship, a partnership, or a corporation. A sole proprietorship is simply one individual person who runs his/her own business. A sole proprietorship can file for either Chapter 7, Chapter 11 or Chapter 13 bankruptcy. A partnership or corporation involves more than one person, usually a group of people, who are running the business. These can both file for Chapter 7 or Chapter 11 bankruptcy. In Chapter 7 bankruptcy, the business is liquidated, and then closed. A court trustee takes possession of all its assets, which are used to pay the creditors, and then the rest of the debts are “discharged”, or cancelled. In Chapter 11 or Chapter 13 bankruptcy, the business is reorganized and continues to operate under the financial supervision of a court trustee. Arrangements are made for creditors to be repaid over time, allowing the business to become financially solvent again.
What Is a Creditor’s Committee?
A creditor’s committee is a group of the business’s creditors who will represent all the creditors owed by the business. These people are chosen by the bankruptcy court trustee. The secured creditors on this committee are the ones whose debt is paid off first by the debtor. However, the creditor’s committee also ensures that the unsecured creditors are also represented in the bankruptcy negotiations and decisions and are also fairly paid from the business’s assets.
What Is a Receivership?
A receivership is a state court proceeding in which a receiver is appointed by the court to run the business. This can happen before bankruptcy, with the hope of managing the business assets so that solvency can be regained.
Call to Schedule a Consultation With a Minnesota Business Bankruptcy Attorney Today
If you want to learn more about business bankruptcy, call to schedule a consultation with a Minnesota business bankruptcy attorney today. The experienced staff at the Hoverson Law Offices, PA can help you learn about the business bankruptcy options that are available and can help you choose one that works for your business. Visit our website at hoversonlaw.com or give us a call at 612-349-2728 and schedule a consultation with our professional staff. We’ll help you manage your assets and recover the most that you can from your distressed business.