Relevant Types Of Bankruptcies In Los Angeles, California
Some companies decide to declare bankruptcy as a solution to their financial problems. Therefore, bankruptcy may be a possibility for you if your company is having financial difficulties and finding it difficult to pay its debts.
However, bankruptcy can be a complicated topic. So, it's essential to learn the basics before delving into California bankruptcy and how it might affect your businesses.
Here's how our prescreened California Business Lawyers would advise clients on filing bankruptcy:
Defining Bankruptcy In Los Angeles, California
A federal court procedure called bankruptcy is available to people and organizations who cannot pay their debts. The procedure pays off all debts and eliminates them while safeguarding people or corporations in bankruptcy court.
"Liquidation" or "reorganization" are frequently used to describe bankruptcy. There are several distinct sorts of bankruptcy that a business owner may have to file for. You should file for a particular type depending on your specific circumstances.
If you're unsure what type of bankruptcy you want to file for, you should consult prescreened Business Lawyers in Los Angeles. They can review your case and advise you on the best next step for your business.
The Different Types Of Bankruptcy
As mentioned, your filing depends on your business's current situation. Here are two types of bankruptcy businesses file for:
Liquidation is the name for this sort of bankruptcy. A company that doesn't intend to continue open can file for bankruptcy under Chapter 7. This is so because there is no repayment schedule included in this filing. Small enterprises and sole proprietors should go with this option. The trustee will sell any company assets necessary to pay obligations once satisfied. The bankruptcy code does, however, permit debtors to retain some "exempt property." However, it is anticipated that there will be some sort of property loss with this kind of filing.
A company can start the Chapter 7 bankruptcy process by filing with the bankruptcy court with jurisdiction over it. However, various consequences may occur based on the location of the company or the location of its primary place of business.
For instance, a business legally based in California but with corporate headquarters in a different state has two options. The company can use either file with the bankruptcy courts in the said state or the California bankruptcy courts in the local jurisdiction. In either case, a trustee must be chosen since they are a neutral party.
Your company can recover from this kind of bankruptcy. Therefore, Chapter 11 is sometimes known as repayment and, on occasion, reorganization. Whatever it is called, a reorganization plan needs to be created. Thus, although some single proprietorships have elected to file Chapter 11, Chapter 11 bankruptcy is best suited for corporations and limited liability companies. However, chapter 11 does attract more attention from the bankruptcy courts since it enables an organization to recover and includes restructuring.
A firm can file for this kind of bankruptcy with the bankruptcy court that has jurisdiction over it, just like a Chapter 7 petition. In this situation, the jurisdiction is physically located. Chapter 11 is unique because either the debtors or the creditors may file it.
Additionally, an involuntary petition is started by the creditors of a firm. Therefore, further paperwork will be needed unless the judge presiding over the case orders otherwise. Schedules of assets and liabilities, schedules of current revenue and expenses, schedules of contracts and leases, and statements of financial affairs are typically included in documents.
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