June 16, 2006, Newsletter Issue #18: Business Bankruptcy Options

Tip of the Week

There are basically two types of business bankruptcy:

Chapter 7 Bankruptcy, or liquidation, meaning a sale of assets to satisfy creditors
Chapter 11 Bankruptcy, or reorganization, allowing a business to reorganize its debt structure without shutting the doors to the business.

The amount of debt that a company is required to pay will be based on the value of the business at the time of filing, the ability to pay, and willingness of creditors to accept delayed payments, expecting the business to eventually return to profitability.

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