Types of business bankruptcy
It is essential for a capitalist economy to have a fair and efficient system for business bankruptcy. There are different types of business bankruptcies. Before going for business bankruptcy filing, it is necessary to know which type will be appropriate. The following types are given:
• Chapter 7: Chapter 7 for businesses means a complete liquidation of the company's assets in favor of its creditors. The assets are sold and divided between creditors, after the fees and costs of the trustee are paid. Chapter 7 bankruptcy usually signifies the end of a business.
• Chapter 11: Chapter 11 is used to help a company which can operate with some help, but will need some time to repay its debt. This form of bankruptcy is also called restructuring. Reorganization or restructuring plan is compiled and implemented with a court-appointed overseer in charge.
• Chapter 13: A Chapter 13 bankruptcy is really a personal bankruptcy used by an individual who is involved in a failing business who wants to protect his or her personal assets.