In the Texas and across the United States, most business and commercial bankruptcies occur due to an economic downturn or lack of business friendly laws in a particular state. During a bankruptcy proceeding, the federal court requires the business owner or the company to provide a reasonable plan on how it will pay its debts.
If the business has fewer assets and it’s not possible to restructure its debt, filing for Chapter 7 liquidation is better. It is also a sign that the company has no foreseeable future. In contrast, Chapter 11 bankruptcies are often preferred by businesses that feel they can reorganize their business to come out of the debt.
Successful case studies
While many businesses fail to pay their debts even after filing for Chapter 11 bankruptcy, there are lots of successful stories to encourage business owners to get help by filing for Chapter 11. Here are some of the most well-known recent examples:
- Apple and Chrysler took government bailout packages to reorganize their business structures. Eventually, both these companies managed to attract investors who bailed out these companies from debt.
- General Motors and Ally Financial are prominent names in the auto industry that took government assistance to get out of the debt. After the approval for the budget restructuring plan, both companies emerged even more profitable and healthier than the pre-bankruptcy period.
- Marvel Entertainment and Six Flags successfully reorganized their businesses by changing their corporate structure. During the bankruptcy proceeding, Marvel Entertainment entered the movie-making businesses while continuing the traditional comic book segment.
Many might think that filing for a bankruptcy is detrimental to a business. Contrary to the belief, lots of companies come out stronger. If your business is in a difficult situation, getting help with business and commercial bankruptcies, often, leads to a better future.