There is always risk in starting or purchasing a business. If things don’t go as planned and your business is facing insolvency, then the bankruptcy system in the United States provides options for a fresh start. Bankruptcy can be a key component in helping business owners keep their companies intact or move on to new opportunities.
While bankruptcy is a good restructuring option for many businesses, others are unable to afford the administrative costs of the process. For these businesses, there may be out-of-court solutions. If your company is facing insolvency, then it is important that you are aware of every legal option for reaching your debt settlement goals.
Before choosing Chapter 11 or Chapter 7 bankruptcy, you might want to speak with a lawyer about strategies for negotiating the debt, restructuring the debt or exchanging debt for equity. It may also be possible to renegotiate interest rates, restructure security agreements or pledge collateral.
If these out-of-court solutions are not possible, then you may need to explore your Chapter 7 or Chapter 11 options. An attorney with experience in representing a variety of parties in bankruptcy cases can explain which route is best for your particular situation.
The U.S. Bankruptcy Code hasn’t seen a major overhaul since the 1970s, though some important changes have taken shape since then. In 2012, the American Bankruptcy Institute (ABI) put together a commission to investigate possible reforms of the bankruptcy system. The issues the commission addressed are relevant to large corporations and companies for which out-of-court workouts may be appropriate.
A recent article in the Chicago Tribune touches on some of the issues explored by the ABI commission.