Even the most well-managed companies can face disastrous financial problems. If this has happened to your business, you may be thinking about filing for company bankruptcy. Although a bankruptcy can take several months, it does not have to be a difficult task. With the help of an experienced attorney, you can navigate through the process of obtaining bankruptcy protection for your company.
Provide your attorney with financial documents for your company. This includes a list of creditors' names and addresses, income and loss statements, and a list of company assets. The court may require additional documents to complete your filing.
With the help of your attorney, decide which type of company bankruptcy will best meet your objectives. If you no longer want to conduct business operations, you can file Chapter 7 and have the company's assets liquidated to pay your creditors.
If you plan to continue operations, your attorney can help you file for Chapter 11 bankruptcy protection. This type of bankruptcy reorganizes your debt, giving you more time to pay your creditors. In some cases, your creditors will own all common stock issued by your company after the bankruptcy.
If you file for Chapter 11 bankruptcy protection, draft a financial reorganization plan. This plan details how you intend to repay your creditors after the bankruptcy is discharged. Creditors have the opportunity to object to the plan, but it is up to the bankruptcy court to determine the validity of an objection. You will have 120 days after your petition date to file a plan. After this time, a creditor or case trustee may draft and file a plan.
Hire an attorney who possesses years of experience with company bankruptcy filings. Your attorney should demonstrate a low dismissal rate--most of his previous clients should have successfully obtained bankruptcy discharges. Also, ask about representation fees up front since your company is already experiencing severe financial problems. You won't want to incur "surprise" fees during the filing process.
Obtain bankruptcy discharge. If you filed a Chapter 7 petition, business operations will cease. If you filed Chapter 11, you will begin fulfilling your debt obligations under the reorganization plan.
Attend a meeting of creditors. This typically occurs within one month after your attorney has filed your company's bankruptcy petition. In this meeting, you are required to answer questions from both your creditors and the bankruptcy trustee. You will make statements under oath, so it is important to be as honest as possible when answering questions.
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