Bankruptcy – A Step Towards Viability
Bankruptcy is a harsh fact of life in the current economy; nonetheless it is regarded as a step towards viability. Bankruptcy laws help organizations and individuals who can no longer pay their creditors and get a fresh start – by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. The claiming of bankruptcy indeed opens up new avenues to restructure ones business.
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The United States Bankruptcy Code is enlisted as Chapter 11, which is applicable to every business whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. According to Chapter 11, after Business Bankruptcy filing, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court. Although some critics are skeptical regarding Chapter 11 bankruptcy laws as excessively lenient in giving a needless "escape hatch" to the incompetent management of a failing company, in many cases, businesses have re-emerged from Chapter 11 and continue to operate normally.