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Bankruptcy Attorneys Oregon: Business Bankruptcy

Businesses, just like individuals, sometimes run into financial difficulty. When that happens, a decision will need to be made about what to do with the business – try to keep it operating (called reorganization in bankruptcy language) or go out of business (called liquidation).

Businesses are usually grouped into three different types – sole proprietorship, partnership or corporation. The consequences of filing bankruptcy are different depending upon which type of bankruptcy is filed and the nature of the ownership of the business.

When a troubled business decides that it is unable to pay its loans or its bills, it can file either a Chapter 7 (liquidation) or Chapter 11 (reorganization). A Chapter 7 filing means that the business intends to sell all of its assets, distribute the proceeds to its creditors and stop operations. A Chapter 11 filing, on the other hand, is an attempt to stay in business while a bankruptcy court supervises the reorganization of the company’s debt obligations. Bankruptcy attorneys in Oregon can help your business decide which form is right for your business.

For a sole proprietorship, there is no separation of identity between the owner and the business. Therefore, the bankruptcy of a sole proprietorship includes both the business and personal assets of the owner – in other words, the individual owner of the business is the one who files bankruptcy and must include all the individual’s personal and business assets and liabilities. Chapter 11 is typically used for corporate bankruptcies and restructuring. It is not commonly used by individual consumers because it is far more complex and expensive to pursue. The most important thing is to consult with bankruptcy attorneys in Oregon to start down the right path.

In a partnership bankruptcy filing, the partnership exists separate and apart from its partners. In a partnership bankruptcy case, however, the partners' assets may, in some cases, be used to pay creditors which may force the individual partner to also file bankruptcy.

A corporation exists separate and apart from its owners, the stockholders. A bankruptcy filed by a corporation does not put at risk the personal assets of the stockholders. Most publicly-held companies will file under Chapter 11 rather than Chapter 7 because they can still run their business and control the bankruptcy process. Chapter 11 provides a process for rehabilitating the company's faltering business. Sometimes the company successfully works out a plan to return to profitability; sometimes, in the end, it liquidates.

As complicated as business bankruptcy can be, bankruptcy attorneys in Oregon Fresh Start's organization can help you get back on the road to financial success.

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