Business Bankruptcy Makes Little Sense.

bankruptcyBankruptcy is a losing concept for small business unless its a chapter 7 you are planning and then it is a pure waste if money in my opinion, let me explain.

First of all if you are planning a chapter 11 to reorganize and protect your assets, by filing the business is protected from foreclosure , so long as the collateral is worth the amount f the loan, which is seldom the case, so the bank can file a lift if stay motion and will be granted the right to foreclose and liquidate. Case closed, waste of time, didn’t work.

The banks who are unsecured do not have to remain in play as an unsecured lender which is exactly what occurs when the collateral of the loan is worth less the the debt.

Thus the only real option is a debt workout outside of the legal system.

For those who want to escape the debt and do not  mind losing a personal chapter 7 is all that really makes sense as that is the only path needed. here is no requirement to settle the business debts once your personal guaranty is off the hook.

In the end the best bet is always a debt forgiveness workout, keeping the business alive and well, reducing the debt and turning the business around.

Posted in BLOG.

Don Todrin