Business bankruptcy happens every day to many businesses and whilst it is never what a business owner hopes to go through, it is sadly just a fact of life and a risk which is always there. If you do run a business and bankruptcy is on your mind, perhaps as a result of the current situation or perhaps this was just the final nail in the coffin, there is a lot which you need to consider before you pull the plug on the entire operation.
Is It Necessary?
You may have to wind up the business for financial reasons but you need to understand whether or not bankruptcy is the only option. For example you may be able to negotiate some kind of deal outside of court, or perhaps come up with a workout plan with your creditors.
Lawyer?
The Bankruptcy Code doesn’t obligate you to get legal protection but they can of course offer you some help. In most cases you are better off hiring a high-quality law firm like Prime Lawyers, who will be able to manage proceedings for you. With this being said, it is important to recognize that a legal team is not mandatory.
Grand Opening/Grand Closing
Another key thing to consider at this stage is whether or not you wish to close your business altogether. For example you may see a moment in the future whereby debts can be paid and you can take the business back to being profitable again, in which case you would of course be better off leaving the business open, albeit not operational. If you wish to keep your business open you will have to pay out for legal support so that you can file for a Chapter 11 Case.
Privacy
During a bankruptcy case there is absolutely no privacy and the full details of your business and its operation will be laid bare before the courts. This is something which you have to think deeply about because if there is anything there which you don’t want to come to light then this is the time to pull the plug.
Guarantees
It is important to remember that a bankruptcy filing does not prevent collection activities against people who have cosigned or guaranteed debt on your behalf. If there are any guarantors involved they should be made aware of what is going on.
Mental Health
The acceptance of a failed business, the piling up of debts and then the declaration of bankruptcy can all take its toll on you and to be honest you need to consider whether or not you have the emotional and mental strength to get through this. It is important that we always take care of ourselves especially during testing times like this, so ensure that you have spared a thought for how all of this is going to affect you.
These are the key areas for consideration which you should be paying attention to ahead of filing for bankruptcy for your business.
