If calls from dozens of creditors has become an unwanted daily occurrence or if a business is experiencing critical cash flow issues due to an unfortunate accident, it may be time for them to consider filing for bankruptcy. Businesses often wrongly see filing bankruptcy only as a last resort because they do not adequately understand what filing for bankruptcy entails and fear they will lose everything.
However, filing for bankruptcy might be able to provide a business protection from creditors for a time, depending on their specific situation. With the help of an experienced Houston bankruptcy attorney who is board certified, filing bankruptcy can help a business take back control of their situation instead of being at the mercy of unrelenting creditors.
What Is Bankruptcy?
Bankruptcy is defined as being lacking or in a state of impoverishment, and it can apply to both small and large businesses.
When it comes to businesses, reasons for filing for bankruptcy could be:
- Accidents
- Cash flow problems
- Loss of capital
- Loss of clients
- Poor management
- Powerful industry competition
- Rising operating costs
- Tax-related problems
Areas of Legal Expertise Within Bankruptcy
Although the word bankruptcy generally boils down to one common meaning, there are different types of bankruptcy and issues that arise within each. Bankruptcy can affect a business and can be designated as Chapter 7 or Chapter 11, and related bankruptcy issues can include asset acquisition, creditor representation, and debtor in possession lenders.
Some of the specific areas of bankruptcy in which Harold “Hap” May, P.C. Attorneys at Law can help include:
Asset Acquisition During Bankruptcy
If a buyer hopes to take control of a bankrupt company’s assets but does not want to have control of the entire business operation, asset acquisition strategies may apply. In other words, a buyer or investor can be selective about which company assets they would like rather than having to buy even the ones they do not want. A bankruptcy attorney can be an asset in these negotiations.
Creditor Representation
If a debtor of a company is considering filing for bankruptcy protection, that creditor may need to enlist the help of a law firm to help protect them in bankruptcy court. This can include circumstances surrounding adequate protection, automatic stay, non-dischargeable debts, and failure to disclose.
Business Bankruptcy (Including Chapter 7 And Chapter 11)
Businesses filing Chapter 7 bankruptcy generally do so to liquidate the company and discharge debts. Chapter 13 bankruptcy may work for businesses who want to consolidate debt and come up with a finite term repayment plan. Filing Chapter 13 allows a business to put a hold on creditor collections while working out a repayment plan with them, all while continuing to operate the business. Chapter 11 bankruptcy works much the same way as Chapter 13 but is generally for businesses with larger debt.
Debtor In Possession Lender
If a company is forced to file for Chapter 11 bankruptcy, it does not automatically equal liquidation of the business. In some cases, the company can reorganize with the help of a lender that provides funds. DIP areas in which we may be able to assist are DIP financing, DIP agreements, and priming liens just to name a few.
If you or your business is struggling financially and you would like a consultation to discuss bankruptcy and if it is the next best step, Harold “Hap” May, P.C. Attorneys at Law welcome the opportunity to speak with you.