This a guest post from Mark E. Godbey, attorney at Godbey & Associates, serving Northern Kentucky, Southwestern Ohio and other counties throughout Ohio. Godbey & Associates represents and advises clients in the areas of bankruptcy, divorce, personal injury, family law, probate and estate planning, small business representation, immigration matters, and criminal law.
Many businesses have been burdened by a sluggish economy in recent years and are having difficulty reaching their financial goals, let alone paying the bills. After all the sacrifices and long hours — and even after having experienced some success — many business owners find themselves facing the painful prospect of considering bankruptcy.
Where to Turn for Help
Entrepreneurial individuals are generally very competitive. Though many might be struggling to keep their businesses afloat, they are not ready to give up without a fight. Depending on the situation, there may be options available that could help embattled business owners survive.
Bankruptcy is not always the “end game” for a business. In fact, it could help pave the way for a company to eventually get back on track. If a business owner should decide to file bankruptcy, the first step should be to enlist the services of an experienced bankruptcy attorney to discuss the best course of action.
The most commonly used forms of bankruptcy for businesses are Chapter 7 and Chapter 11. Under a Chapter 7, business owners and their bankruptcy lawyers have come to the conclusion that there is little or no possibility the company can continue in its current financial state. The amount of debt owed outweighs the company's ability to pay their creditors. In this case, the business will be shut down and all assets will be liquidated. This often paves the way for business owners to cut their losses in a failing business and re-establish themselves in a new business venture.
The distinct difference in a Chapter 11 is that this form of bankruptcy allows for a “reorganization” of the repayment of business debts. This means a business can keep its property and continue to operate after developing a plan to pay off creditors. In a Chapter 11, creditors vote to accept or reject the payment plan.
A bankruptcy attorney will help a business owner sort out the complexities of the bankruptcy process and lead them through litigation. In many cases, a business owner will discover that there is life after bankruptcy, and that prosperity may once again be in their future.