Commercial Bankruptcy Attorney for San Fernando/Santa Clarita Valleys

Can a business file a bankruptcy?

Just like an individual, a business may finds itself in financial trouble and be unable to pay its debts. A solution open to the business is to file for bankruptcy.  This is a legal process filed in federal bankruptcy court that will release the business from having to pay all or some of its debts. An experienced Bankruptcy attorney from Cutter & Lax, working in the San Fernando and Santa Clarita areas can advise business owners on whether bankruptcy is the right option.

Businesses have the option to use various types of bankruptcies.  Businesses can usually file either Chapter 7 or Chapter 11, or infrequently Chapter 13. A creditor can sometimes force a business into a bankruptcy as they attempt to collect their debt, but there are strict restrictions on this being able to be accomplished.

Types of Commercial Bankruptcy filings for Santa Clarita & San Fernando
Chapter 7 bankruptcies are employed by businesses that want to liquidate their assets to be relieved of debt. A Chapter 7 bankruptcy is initiated when the business files a petition with the bankruptcy court. The court will order all collection action against the business and its property to cease. The court will appoint a trustee to manage the details of the bankruptcy, including selling business assets to satisfy business debt.  Usually once the bankruptcy goes through, the business no longer exists as all of its assets are gone.

Chapter 11 bankruptcies are rather complex and require the skill and knowledge of a professional attorney, such as Cutter & Lax.  In Chapter 11 bankruptcies, the commercial debtor is usually allowed to stay in business while the bankruptcy is proceeding. As with a Chapter 7, all collection procedures against the business must cease during the proceeding. 
A plan of reorganization must be made and approved by the court with input from the creditors.  The plan must show how the business intends to conduct business while being able to continue payments to creditors.  If the court cannot approve the plan, this type of bankruptcy may be converted to a Chapter 7.

Bankruptcy is not always the best option for a business.  It requires the careful review of your personal situation to determine what choice a business owner should make. Alternatives to bankruptcy do exist and can include working directly with creditors toward a repayment plan or turning over assets for the benefit of creditors. A lawyer experienced in bankruptcy law from Cutter & Lax is the right choice to make in choosing someone to guide your business through this difficult situation.

Contact Cutter & Lax, Commercial Bankruptcy Attorneys, for a thorough review of your business situation.