Bankruptcy — just the sound of it evokes strong feelings in most people. Although filing for bankruptcy is rarely anyone's first choice when trying to cope with overwhelming debt, the decision to file for bankruptcy can be the right one when made with full awareness of all its consequences. Contact an experienced bankruptcy lawyer to discuss your options.
What You Need to Know about Bankruptcy
Provided by the Law Offices of H. Frank Cahill, in Anchorage, Alaska
If you are considering seeking personal bankruptcy protection, you may be uncertain of your rights, particularly in light of the revisions Congress made to the bankruptcy laws in 2005. The information on this page, is designed to answer your basic questions. For experienced representation in bankruptcy matters, contact the Law Offices of H. Frank Cahill or call our office at 907-222-4905 to set up an appointment.
To learn more about our bankruptcy practice, visit our Chapter 7 bankruptcy page or our Chapter 13 bankruptcy page.
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Contact an experienced personal bankruptcy lawyer! At the Law Offices of H. Frank Cahill, in Anchorage, we have handled consumer bankruptcy filings since 1995. We have a comprehensive understanding of the law and process, including the recent revisions to the bankruptcy laws, and will help you take the steps necessary to use a Chapter 7 or Chapter 13 filing to get a fresh start.
Protecting your personal bankruptcy rights since 1995. At the office of attorney H. Frank Cahill, in Anchorage, we handle all matters related to Chapter 7 or Chapter 13 bankruptcy filings, preparing all the required documents and acting as your advocate in meetings with creditors, the bankruptcy trustee or the court. Contact our office to schedule an appointment.
Commercial Bankruptcy
Like a consumer, a business sometimes finds itself in the uncomfortable position of being unable to pay its debts. One solution is to file for bankruptcy, a legal process in federal bankruptcy court that releases the business from the obligation to pay all or some of its debts. The experienced lawyers at Law Offices of H. Frank Cahill in Anchorage, Alaska advise business owners about whether bankruptcy is right for them.
Bankruptcy Choices for Small Businesses
Businesses must choose among alternative types of bankruptcies, each of which corresponds to a different chapter of the federal Bankruptcy Code. Businesses usually choose either Chapter 7 or Chapter 11, or occasionally Chapter 13. Sometimes businesses can be involuntary drawn into bankruptcy by their creditors, who face stiff financial penalties if they initiate an involuntary bankruptcy for invalid reasons.
Chapter 7
Chapter 7 bankruptcies are called "liquidation bankruptcies." Chapter 7 is usually employed by consumer debtors, but can also be used by businesses that want to liquidate their assets to be relieved of debt. A Chapter 7 bankruptcy is commenced when the business files a petition with the bankruptcy court. The court then orders an automatic stay of all collection action against the business and its property. A court-appointed trustee manages the details of the bankruptcy, selling business assets to satisfy business debt, to the extent possible. At the conclusion of the proceeding, remaining debts of the business are not discharged as with an individual debtor, but generally the business ceases to exist because its assets are gone and it is no longer a profitable concern.
Chapter 11
In Chapter 11 bankruptcies, which are usually filed by businesses and rarely by individuals, the commercial debtor is usually allowed to stay in business throughout the bankruptcy proceedings. A business debtor may only operate independently in its ordinary course; transactions outside the ordinary course of business require court approval.
A Chapter 11 proceeding, like one under Chapter 7, is initiated by filing a petition, but a trustee is not automatically appointed. Although the bankruptcy judge may decide to appoint a trustee in a Chapter 11 case, it is the exception rather than the rule. As in Chapter 7, the filing of the bankruptcy petition stops creditors from attempting to collect their debts.
The debtor has time to file a proposed plan of reorganization. The plan of reorganization sets forth in detail how the debtor intends to conduct its business, while continuing to make payments to its creditors. In some situations, creditors may instead or also propose plans of reorganization. Creditors are divided into classes with varying rights depending upon the types of debt they hold. The approval process involves negotiation and input from creditors. Ultimately, a plan must be approved by the court. In some cases, the court approves the plan even though some of the creditors did not. If no plan is approved, however, the bankruptcy is often converted to a Chapter 7 liquidation or may be dismissed.
The choice between Chapter 7 and Chapter 11 is not necessarily permanent; once proceedings have begun, a case may be converted to a different chapter, under certain circumstances.
Conclusion
Bankruptcy may not be the best option for every business, but sometimes it is the best choice a business owner can make. Alternatives to bankruptcy include working informally with creditors toward a repayment plan or assigning assets for the benefit of creditors. A lawyer experienced in bankruptcy law, like those at Law Offices of H. Frank Cahill in Anchorage, Alaska, can help a business decide whether bankruptcy best meets its needs.
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