Checklist for Business Bankruptcy
If your business has fallen on hard times, you’re probably considering various options to cut your losses and protect your interests to the fullest extent possible. Filing for bankruptcy in the US Bankruptcy Court – Eastern District of North Carolina may be one alternative. It does have serious consequences for your future, but it can also be a way to make the best of a bad situation.
A North Carolina business bankruptcy lawyer can explain the pros and cons, and assist in making the right decision for your specific circumstances. However, a checklist may also help you know what to expect.
Know Your Options:
For most business owners, you’ll have to consider multiple types of bankruptcy. You might opt for Chapter 7 if you’re looking into liquidation, where your intent is to sell off your assets, pay as much as you can to creditors, and wrap up the company.
On the other hand, Chapter 11 may be a better fit if you want to restructure your debt and pay off creditors – and then continue operations through a reorganized entity. Most of these cases require you to pay creditors from your future revenue.
Collect Essential Business Records
You must provide a significant amount of documentation when filing your petition for bankruptcy, whether you go with Chapter 7 or 11. Gather such business records as:
- All income, employment, and business tax information;
- Paperwork regarding business debt;
- Details on your accounts receivable, if any;
- A list of real estate, assets, inventory, equipment, and other business property;
- Bank statements; and,
- Any other documentation that’s relevant to the debt, income, or net worth of your business.
Set Up Credit Counseling
One requirement for business bankruptcy is going through credit counseling to determine whether there are options besides bankruptcy to resolve your financial woes. You must participate in these sessions before you file your petition, so you should schedule them as soon as possible.
Avoid Business Bankruptcy Pitfalls
The most important mistake to avoid is waiting to file business bankruptcy, especially if you’re paying out of your own personal assets or diminishing your company’s value in attempts to get out of debt. In addition, steer clear of these other pitfalls that can affect your rights.
- Don’t make misrepresentations, or provide false or misleading information regarding your business records;
- Avoid depleting certain business assets that you may be able to protect under specific provisions of the Chapter 7 or Chapter 11 bankruptcy regulations;
- Never accumulate additional debt with new or existing creditors; and,
- Don’t transfer assets or make payments that could be considered “preferential” treatment to creditors.
Contact a North Carolina Business Bankruptcy Attorney
This checklist may be useful as you’re considering bankruptcy for your business, but you can maximize the benefits of the process when you work with an experienced lawyer. To learn more, please contact Howard, Stallings, From, Atkins, Angell & Davis, P.A. We’re happy to schedule a consultation at any of our offices in Raleigh, New Bern, or Morehead City, NC.