The best way for businesses to have their debts written off without winding up their business is debt reorganization. A chapter 11 Monterey residents should know, is a special type of bankruptcy that has been designed specifically for businesses. It is similar to chapter 13, except for the fact that the latter is meant for individual debtors, while this option is meant to be used by businesses.
Any business has a wide range of assets. This may include tangible assets, such as equipment, plant, machinery and inventory, and intangible assets, such as patents, leases and goodwill on the property among others. If a business does not have an income, these assets can be liquidated to settle its debts. If there is a decent income, however, monthly payments will ensure creditors get their dues.
The first thing the judge will do after receiving a bankruptcy petition is appoint a trustee to supervise the entire process. After being appointed, the trustee will become a board member and the most powerful decision-maker. In fact, no important decision can sail through without the trustee giving approval. For instance, the management cannot hire new employees without the approval of the trustee. Furthermore, the trustee can cancel all overseas holidays for managers and fire non-essential employees.
During the bankruptcy process, assets cannot be disposed of. Buying of new assets will also be kept to the minimum. This will be the status quo throughout the bankruptcy process. It is important for business owners to keep this in mind when seeking to have their business declared bankrupt.
The first thing the court will require from the management once a bankruptcy petition has been filed is a detailed plan of how the business will pay off its debts. This means that the company must have a reliable source of income. If not, the trustee will disqualify the applicant from this bankruptcy option and recommend liquidation. In such a case, the business will be wound up and assets sold to pay off creditors. This will end the business.
When drafting the repayment plan, the management must state the projected monthly income over the next few years as well as income earned over the last couple of years. Employee salaries, overheads and other costs must also be stated. The proposed monthly payment must be reasonable and fair to the every party. Creditors will have to approve the plan after the debtor presents it in a formal meeting organized by the trustee. However, it is the court that will decide whether or not to approve it.
Involuntary bankruptcy normally occurs when creditors take a debtor to court. By having their client declared bankrupt, the creditor can have their assets liquidated or get a different legal solution to their debt. Voluntary bankruptcy is where the debtor moves to court to seek legal protection.
Bankruptcy often leads to debt forgiveness. However, it can also cause harm to a business. This is because it will damage the reputation of the business. Therefore, a lot of thought should go into the decision-making process to ensure it is the right option.
Any business has a wide range of assets. This may include tangible assets, such as equipment, plant, machinery and inventory, and intangible assets, such as patents, leases and goodwill on the property among others. If a business does not have an income, these assets can be liquidated to settle its debts. If there is a decent income, however, monthly payments will ensure creditors get their dues.
The first thing the judge will do after receiving a bankruptcy petition is appoint a trustee to supervise the entire process. After being appointed, the trustee will become a board member and the most powerful decision-maker. In fact, no important decision can sail through without the trustee giving approval. For instance, the management cannot hire new employees without the approval of the trustee. Furthermore, the trustee can cancel all overseas holidays for managers and fire non-essential employees.
During the bankruptcy process, assets cannot be disposed of. Buying of new assets will also be kept to the minimum. This will be the status quo throughout the bankruptcy process. It is important for business owners to keep this in mind when seeking to have their business declared bankrupt.
The first thing the court will require from the management once a bankruptcy petition has been filed is a detailed plan of how the business will pay off its debts. This means that the company must have a reliable source of income. If not, the trustee will disqualify the applicant from this bankruptcy option and recommend liquidation. In such a case, the business will be wound up and assets sold to pay off creditors. This will end the business.
When drafting the repayment plan, the management must state the projected monthly income over the next few years as well as income earned over the last couple of years. Employee salaries, overheads and other costs must also be stated. The proposed monthly payment must be reasonable and fair to the every party. Creditors will have to approve the plan after the debtor presents it in a formal meeting organized by the trustee. However, it is the court that will decide whether or not to approve it.
Involuntary bankruptcy normally occurs when creditors take a debtor to court. By having their client declared bankrupt, the creditor can have their assets liquidated or get a different legal solution to their debt. Voluntary bankruptcy is where the debtor moves to court to seek legal protection.
Bankruptcy often leads to debt forgiveness. However, it can also cause harm to a business. This is because it will damage the reputation of the business. Therefore, a lot of thought should go into the decision-making process to ensure it is the right option.
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