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What should one know before filing for business bankruptcy?

Business decisions require consideration of a great many factors. The decision to file for Chapter 11 bankruptcy, also known as business reorganization, is no different. Before a Florida business owner makes the important decision of whether or not to file for bankruptcy, he or she will want to consider a number of factors, as well as discuss pressing considerations with his or her attorney.

One essential determination that should be made in the beginning is whether bankruptcy is even necessary. It may be possible, in conjunction with your attorney, to arrange a workout with your creditors that helps resolve outstanding financial issues.

Assuming a business owner, after consultation with his or her attorney, decides to proceed with a bankruptcy filing, it will be important to determine whether he or she wishes to close the business or hopes to continue to operate it on a profitable basis. In the event a business owner wants to continue to operate the business, a solid business plan needs to be in place regarding how to make the business profitable, which may include the hiring of a consultant to help facilitate this turnaround.

Business bankruptcy does impose restrictions on business operations, and may affect cash flow and other business debt negotiations. Knowing that you may have to ask for court approval for dealings that are outside of the ordinary course of business can be helpful for a business owner to know upfront.

A business owner may have questions about the bankruptcy process initially and not know how best to proceed. However, after consultation with an attorney, he or she can arrive at the answers that are appropriate for his or her situation, and make an informed business decision.

Source: FindLaw, "Ten Things to Think About Before Filing for Bankruptcy," accessed Aug. 7, 2015

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