Filing for bankruptcy should always be your last resort; however, there are circumstances where bankruptcy is inevitable. If you’re considering corporate bankruptcy, chatting with an accountant beforehand will make sure you are aware of your options so you can make an informed decision.
What is Corporate Bankruptcy?
When a corporation reaches a stage where the debts of the corporation are no longer being paid on the terms agreed upon, it becomes insolvent. A corporation can be insolvent for an extended period of time before filing for bankruptcy.
If your business is a sole proprietorship or a partnership, the assets of the business are also your personal assets, making a small business bankruptcy a personal bankruptcy. If your business is incorporated, it is considered a separate legal entity, and therefore gives you liability protection.
If you declare bankruptcy, you surrender everything you own to a licensed insolvency trustee in exchange for the elimination of your debts. A licensed insolvency trustee will take your assets and sell or use them to pay off your creditors. While bankruptcy can give you a chance to start over, your credit score will be negatively affected and you will be required to perform certain duties, like reporting your income to your trustee every month.
If your business is in financial trouble, consider these options before turning to bankruptcy:
- Working with a professional to rework your budgets
- Consolidating loans
- Selling assets
- Filing a division 1 proposal (you will work with a trustee to offer to pay your creditors a percentage of what you owe them over a period of time).
How Liu & Associates Can Help
Liu & Associates has licensed insolvency trustees that can assist you when filing your corporate bankruptcy. In our initial meeting, we cover topics such as:
- The current cash flow of the business and its availability to meet current expenses
- If there is any goodwill present, and how can it be leveraged
- Are there any options other than bankruptcy available?
If the decision is made to proceed with bankruptcy, we will prepare all the required documents for you.
If you’re considering corporate bankruptcy, call or visit us today to schedule an appointment to discuss your options.