Federal bankruptcy laws govern how companies go out of business or recover from crippling debt.
A bankrupt company, the "debtor," might use Chapter 11 bankruptcy of the Bankruptcy Code to "reorganize" its business and try to become profitable again. Management continues to run the day-to-day business operations but a bankruptcy court must approve all significant business decisions. Some big Chapter 11 filings have included K-Mart, WorldCom, and Enron. A Chapter 11 case is extremely complicated and not a do-it-yourself filing. Consult with an attorney who is experienced in Chapter 11 filings to sort out the numbers, restructuring, etc.
Under Chapter 7 bankruptcy, the company stops all operations and goes completely out of business. A trustee is appointed to "liquidate" (sell) the company's assets and the money is used to pay off the debt, which may include debts to creditors and investors.
Contact Steven Peck's Premier Legal toll free at 1.866.999.9085 to talk to an experienced California Bankruptcy Attorney and visit us on-line at www.premierlegal.org.
