Bankruptcy is when a person or a company recognizes the inability to pay debts to creditors, and therefore asks for legal assistance to manage all assets, cash flow, and more to pay off the debts more effectively and establish a dialogue with any and all involved creditors. Often, it is companies that do this, and smaller ones that have under 50 employees and under $10 million in assets and under $10 million in profits each year, although wealthier individuals may undertake this procedure as well. What is more, a bankrupt company can get assistance with its bankruptcy case in court if it hires a bankruptcy attorney who can best represent their interests and make sure that a fair deal is reached with creditors and the court by using their legal expertise. A local bankruptcy law firm can be contacted by such a company, and a low cost bankruptcy attorney can be a great deal for any company facing bankruptcy today. What can a bankruptcy lawyer do, and how does a chapter 11 bankruptcy case proceed?
The Court and Bankruptcy
Sometimes, the creditors of a deeply in-debt company may take the initiative and force a chapter 11 bankruptcy case on the debtor company, but more often, it is the bankrupt company that will launch this undertaking instead, and find debt relief for their bankruptcy so they can establish a deal with their creditors so that everyone can get what the want. And during this whole undertaking, a bankrupt company can hire a lawyer, or several, to represent them and make sure that all paperwork is properly handled and that the client company is not mistreated during the chapter 11 bankruptcy case.
During the chapter 11 bankruptcy case, the debtor company will receive a time period of a few months in which it may develop and offer a consolidation plan, where its assets and cash flow are reorganized and minimized to reduce overhead and other expenses, and so the company can start paying back its creditors more effectively. Often, a company in this case can be considered DIP, or debtor in possession. This simply means that the debtor company may continue to operate as normal during the chapter 11 case, although there are some conditions involved. The debtor company cannot, for example, sell off its major assets or buy new ones such as real estate, nor can it sell anything except the items or services that it normally sells during business operations. The company also may not take on new debts during this time, nor it may hire more legal assistance. However, if the courts and the creditors agree, the debtor company may undertake these actions. If the debtor company acts out without clearance from the court, or if it acted with dishonesty or fraud before or during the court case, it may no longer be considered debtor in possession.
With the cooperation of the creditors and court, the debtor company will liquidate any or even all of its assets and pay back its loans and debt to the best of its ability, although not in all cases will the creditors receive everything that they are owed. Sometimes, the creditors will have to settle for a partial repayment, but they can rest assured that all possible steps were taken for those debts to be repaid. And all the while, in a bankruptcy case, the creditors may also hire their own lawyers to enforce their will in the bankruptcy case, and these lawyers may also investigate whether the debtor company is acting in bad faith or deceiving other parties involved.