Businesses are prone to hit financial troubles due to many possible scenarios. It could be bad management, a down turn in profits due to a slump in the economy, or many other causes, but whatever the reason that business could end up having to close down and go into bankruptcy, to the cost of any jobs and assets. The area of bankruptcy that governs businesses is Chapter 7 of the bankruptcy codes. In Chapter 7 a business is assigned a trustee who oversees the debts of the business, company or organization and pays off the creditors. It doesn’t necessarily mean the business has to close down, as it is well documented that large companies such as Kmart have declared bankruptcy before and they still continue to stay open for business.
Creditors and Employees
Not all the employees get laid off during a bankruptcy declaration. In fact many times no employees are laid off at all, but this largely depends on the type of the business and the way it is financed and run. In some cases a part of the company or a division of the company can be sold off to another company who then takes over the running of it. The employees can be ‘transferred’ to the new department so that they remain employed without any upheaval. A partnership or corporation in bankruptcy is usually dissolved rather than discharged. Discharged can only be given to individuals who enter bankruptcy procedures. The assets are administered and once that is complete the case is technically closed until any or all statutes of limitations expire.
Filing Methods
A business can declare itself bankrupt by filing the appropriate federal bankruptcy forms and fees. The forms must be completed by the owner or proprietor of the business, or their bankruptcy attorney, and sent by mail. There is also the option of using bankruptcy software and submitting the application online. Business bankruptcy in Chicago does not always require an attorney if they are entering bankruptcy proceedings, but they may wish to do so on many grounds. Most businesses simply choose that option so that they do not make any filing mistakes and having the attorney to submit the forms is better for them. visit the Chicago Debt Solutions for more details. To see their business reviews visit BBB page.
