A Business Bankruptcy Attorney Explains Chapter 7 and Chapter 11 Bankruptcy

Business Bankruptcy Attorney

There are several types of bankruptcy that can be filed by businesses, including Chapter 7 and Chapter 11. Both of these are intended to allow businesses to restructure their debts or liquidate business assets. The process is complex and requires legal guidance from a Business Bankruptcy Attorney in Phoenix Arizona.

Chapter 11

A Chapter 11 is the most common type of business bankruptcy and is also known as a “reorganization.” The goal of Chapter 11 is to help a company rehabilitate itself by reorganizing its expenses and debts, usually reducing or eliminating its liabilities. Like a Chapter 7 case, the company’s creditors are given an opportunity to vote on the proposed plan of reorganization and reject it or accept it.

This process often involves a lengthy court proceeding and may involve creditor committees, examiners, and other parties to the bankruptcy case. Moreover, the bankruptcy trustee is responsible for administering the estate, ensuring that all of the business’s property is sold to pay creditors.

The assets of a business are considered part of the bankruptcy estate if the business is an individual, partnership, or LLC. The trustee has the authority to liquidate those assets and use the proceeds to pay unsecured creditors, such as tax debt, utility bills, and credit card debt.

Some businesses, such as sole proprietorships, can use legal exemptions under state law to protect some or all of their business assets. However, if the bankruptcy trustee decides that those assets are not valuable to the bankruptcy estate and abandons them back to the debtor, they belong to the bankruptcy estate, and cannot be protected with exemptions.

Many of the business bankruptcy lawyers in Phoenix Arizona have extensive experience handling bankruptcy cases involving both individuals and businesses. They understand the nuances of each type of bankruptcy and how to apply their knowledge and skills in order to maximize the benefits for their clients.

Chapter 7

If you are a business owner who has experienced a loss of cash flow, a bankruptcy case may be the best option for your situation. This option allows you to restructure your debt obligations and stop collection efforts or lawsuits from being filed against you.

A Chapter 7 bankruptcy will also allow you to get rid of personal loans that are not secured by collateral. In addition, it will give you a fresh start with a clear financial picture so that you can decide how you want to proceed with your business going forward.

Another type of bankruptcy is Chapter 13. This option is intended for self-employed individuals who have a lot of unsecured debt, such as medical bills, credit cards, and personal loans. It also provides a plan for repayment of the debts over three to five years, enabling you to avoid filing for bankruptcy again in the future.

When you are facing serious financial challenges, you need a business bankruptcy attorney in Phoenix who is willing to fight for your rights and help you determine the best course of action. The bankruptcy attorneys at Davis Miles McGuire Gardner, PLLC have a strong track record for helping their clients navigate the difficult process of filing for bankruptcy relief. They offer free consultations on evenings and weekends, as well as traditional business hours to assist their clients in their time of need.

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