Debt reorganization is the best way for corporate entities to have their business debts written off without having to close shop. A chapter 11 Monterey residents need to know is the best hope for businesses to get out of bad debts. It is the same as chapter 13, except that the latter is only meant for individual consumers while this chapter is meant for corporates.
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.
After filing for bankruptcy, the court will identify a suitable trustee who will take over the affairs of the business. While the management of the firm will remain in place, every major decision will have to go through the trustee. For instance, no new employee can be hired without the approval of the trustee. Similarly, the trustee may start firing non essential employees to lower recurrent expenses. Any unnecessary costs, such as overseas holidays for senior managers may also be cut.
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 will taint the credit history of the borrower. The image and reputation of the debtor may also be damaged severely since bankruptcy is a matter of public knowledge..
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.
After filing for bankruptcy, the court will identify a suitable trustee who will take over the affairs of the business. While the management of the firm will remain in place, every major decision will have to go through the trustee. For instance, no new employee can be hired without the approval of the trustee. Similarly, the trustee may start firing non essential employees to lower recurrent expenses. Any unnecessary costs, such as overseas holidays for senior managers may also be cut.
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 will taint the credit history of the borrower. The image and reputation of the debtor may also be damaged severely since bankruptcy is a matter of public knowledge..
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