Because businesses are distinct financial entities, they have the right to file bankruptcy. Most business owners will opt for Chapter 7 to close up shop, or Chapter 11 to reorganize the company’s debt. Here, Lexington’s C. Roland Krueger Attorney and Counselor at Law explains what you need to know about the different approaches businesses can take when pursuing debt relief. 

Chapter 7

Chapter 7 bankruptcy is the most straightforward way for a business to achieve debt relief. During these proceedings, the company's assets are liquidated to pay back creditors. Chapter 7 is best for entities that are going to be dissolved and therefore do not need any kind of financial reorganization. The concept behind Chapter 7 is simple enough, but since the proceedings are relatively complicated, it is wise to turn to a bankruptcy lawyer for guidance. For example, this approach may not be ideal if the company is a partnership or corporation because neither can receive a discharge of any debt that remains after the liquidation proceedings. 

Chapter 11

Declaring Chapter 11 can save a struggling company. This type of business bankruptcy allows petitioners to remain in operation as they attempt to negotiate with creditors. If they can devise a payment plan that lenders find satisfactory—and the court deems fair and equitable—they can pay back the company's debt gradually. Chapter 11 is ideal for organizations that want to stay operational and have the means to do so if they can get a handle on their debt. They might be behind on certain payments, but they should still have adequate cash flow. If you want to declare Chapter 11, a bankruptcy attorney will guide the case through the proceedings so you can focus on running the business. 

If your company is in trouble, turn to C. Roland Krueger Attorney and Counselor at Law in Lexington, NC, to determine the most strategic way to proceed. This seasoned bankruptcy lawyer helps both individuals and businesses achieve the debt relief they desperately need. He can also assist with asset protection, foreclosure defense, and even long-term financial planning. Visit his website to learn more about the ways he helps clients, or call (336) 248-8464 to schedule an initial consultation today.