Pontiac B2B bankruptcy a responsible business tactic
The economic recession is having a significant impact on businesses operating in Michigan. Law firms working in business bankruptcy—whether in Lapeer, Pontiac or elsewhere—continue to notice that the number of companies inquiring about B2B bankruptcy procedures remains high due to long-range business fundamentals. No less than 2,081 Michigan firms filed under Chapters 7, 11 or 13 bankruptcy in 2009, according to the American Bankruptcy Institute.
Simply put, filing for bankruptcy is a fairly common occurrence. And it might be the most responsible move to consider if debts and cash flow problems are crushing your enterprise.
Under certain conditions, bankruptcy can enable a business to regroup and eventually return to profitability. If the business is encountering financial difficulties but can continue to sell a viable product or service, reorganization under the Chapter 11 Bankruptcy Code is often a smart strategy. Individuals of high net worth might file under Chapter 11, but more typically use Chapter 7 or Chapter 13. Chapter 11 offers several advantages to businesses:
- The bankruptcy court protects the business from creditors until a payback plan can be developed.
- Business operations are kept intact—customers or clients need not know about the plan.
- The B2B bankruptcy reorganization might take place over three to five years, time enough for economic or other business conditions to improve in Lapeer or Pontiac or wherever the company conducts its business.
- If the reorganization fails, the B2B business bankruptcy can transition to a liquidation under Chapter 7.
Nationally, business bankruptcies continue to remain high in 2010. Business filings in the first quarter totaled 14,607, representing a two percent increase over the first quarter of 2009. On the positive side, the first quarter saw a nearly three percent decrease in bankruptcy filings over the fourth quarter of 2010. A national total of nearly 90,000 business bankruptcies were filed in 2009, up from 64,000 in 2008.
The top ten states with the highest per capita filing rate—meaning all types of filings, business and consumer—for the 12-month period ending March 31, 2010 include Michigan as well as Alabama, California, Georgia, Illinois, Indiana, Kentucky, Nevada, Ohio and Tennessee.
Business bankruptcy in Pontiac can protect collateralized assets
Both businesses and individuals might select a Chapter 7 bankruptcy filing. Chapter 7 basically involves liquidation: a trustee of the court takes possession of hard assets and sells them off. The proceeds are then used to pay creditors. After that, the business owner is free of debt.
However, the business owner who files under Chapter 7 may be allowed to keep certain collateralized assets if he or she does a reaffirmation of a particular debt. This is an exception in the bankruptcy filing. The filer commits to covering that particular debt under conditions agreed to in a written contract that is approved by both the creditor and the court. For example, the filer promises to pay off the debt over a set period of time. This clause of the bankruptcy statute is sometimes used when a home was used as collateral for a business loan.
When you see no way out, contact the Law Offices of David W. Brown, PLLC
Bankruptcy does not have to keep you in the dark. With thousands of cases successfully won, the consumer bankruptcy litigators at the Law Offices of David W. Brown, PLLC show you the light at the end of the tunnel. We serve clients in Pontiac and Lapeer. For a free consultation, contact us at (810) 356-0143 today.
