Businesses uphold the right to apply for bankruptcy when they are struggling to gain the income they need to cover their expenses. They have the same rights as individuals in regards to the process of filing. Many businesses today are having to perform large layoffs and call it quits due to lack of consumer purchases. This causes them to have to file for bankruptcy. It is the same as the case for an individual. Money becomes tight, debts pile up and bankruptcy seems to be the only option.
Businesses will more often file for Chapter 11 or Chapter 13 bankruptcy. A business can stay open with both forms, but chapter 13 allows a business to agree on a payment plane, and chapter eleven bankruptcy is a form of reorganization. It is also known as corporate bankruptcy due to its designation toward businesses. Chapter eleven works by the business being allowed to keep control of its assets while being labeled a debtor in possession. It continues to be business as usual while the debtor works in court with the creditor to create a plan to repay the debt that is owed..
The first draft of the proposed plan is voted on by the creditor of the case. Should the creditor agree on the plan, the debtor simply begins paying back the debt as the regulations state, however should the plan fail to pass, the debtor goes back to the drawing board to come up with a new plan. The best way to bring forth an agreement is through the help of a bankruptcy attorney. They work for the business and with the creditor to set forth a plan that is fair for both parties. If an attorney is not called and consulted with, a business may not realize their obligations, and then they lose their business and many people are unemployed. This makes the entire process counterproductive, and causes the business to look foolish.
For more info search Bankruptcy Attorney Phoenix or www.az-bankruptcy.net