When Is The Time Right For My Business To File For Bankruptcy?
Is your business struggling, but you are not certain if you are ready to consider bankruptcy? Deciding to file for business bankruptcy can be a complicated and difficult decision, especially when you are planning to file for Chapter 7 bankruptcy in order to close your business and liquidate business assets. At the same time, Chapter 11 bankruptcy can often be a lifeline for businesses, but a business owner or owners might be reluctant to file because of concerns about how it will impact client relationships or fear about how it will affect employee morale. Thus, many business owners find themselves in a situation where they are asking themselves: when is the time right for my business to file for bankruptcy? In other words, when can you know that bankruptcy is the best decision? A West Palm Beach bankruptcy lawyer at our firm can discuss some key questions you should ask yourself as you consider bankruptcy options for your business.
What is Your End Goal in Potentially Filing for Bankruptcy?
First, you will want to think about the goal you have in mind if you were to file for bankruptcy. For example, is your goal to close the business down, repay creditors as fully as possible, and start over? Or if your goal is to reorganize your business debts and get back on track with various business creditors? Under the U.S. Bankruptcy Code, businesses can file for liquidation bankruptcies under Chapter 7 (which require liquidating business assets and closing the business) as well as reorganization bankruptcies under Chapter 11 and Chapter 12, and sometimes as a Subchapter V bankruptcy for a small business or Chapter 13 for a sole proprietorship (which involve reorganizing debts and keeping the business open).
If your goal is to close the business, the decision to file for bankruptcy is usually much more difficult. If your goal is to catch up on debts you owe and reorganize debts while continuing to run your business, it may be a good idea to think about bankruptcy as soon as possible.
Do You Want to Keep Running Your Business?
If you are considering a liquidation bankruptcy, identifying the right time to file for bankruptcy can feel extremely fraught. According to an article in The New York Times, you should ask yourself if you want to keep running the business and if you are prepared to continue to keep the business open (recognizing that additional debts may be likely to accrue). According to that article, “if your heart is not in it,” it may be time to talk to a bankruptcy lawyer.
If your heart is still in it, you might speak with a bankruptcy attorney about restructuring options. In order to file for bankruptcy under Chapter 11, you will need to be able to show that the business will be able to make a profit. A lawyer can assess your situation and provide you with more information about your options.
Contact a West Palm Beach Bankruptcy Lawyer
Are you thinking about bankruptcy for your business? You are likely struggling to determine whether it is the right time to file for bankruptcy, or whether you should wait as you attempt to improve certain business practices or to gain new customers and clients. It can be extremely difficult to know when the exact right moment is to file for bankruptcy when you are a business owner, but an experienced West Palm Beach bankruptcy attorney at Kelley, Fulton, Kaplan & Eller can help you to determine your options and what is best for your business.