Businesses and corporations also encounter financial difficulties which may require the use of a bankruptcy proceeding in order to allow them to repay debts and reallocate their financial business plans. Many businesses do seek the assistance of a trained bankruptcy attorney to help them navigate the bankruptcy process. This assistance is valuable as it allows businesses to fully understand the pros and cons of corporate bankruptcy and what can be expected from this particular proceeding. Chapter 7 and Chapter 11 bankruptcy are options for businesses and corporations that want to pursue bankruptcy as a method of repaying debts and restructuring their finances.

Chapter 7 corporate bankruptcy requires that a business fully liquidate all of its assets in order to repay existing debts. It is important to note that under Chapter 7 bankruptcy a business is basically willing to cease to exist. This form of bankruptcy is usually a final solution for businesses and companies they realize they can no longer operate because of significant debt. With this form of bankruptcy, an attorney can assist a business with filing the necessary paperwork to start Chapter 7 bankruptcy proceedings. Once the paperwork is filed, the court will appoint a trustee that will determine which assets can be liquidated in order to repay existing debts. This particular form of bankruptcy is an option for those businesses that are willing to end operations in order to repay existing debts. Because of the finality involved with this particular form of chapter 7 bankruptcy, it is very important that businesses have the assistance of a qualified bankruptcy attorney.

Chapter 11 bankruptcy is an option for those businesses that want to remain operating but need assistance paying off existing debts. Many companies that do not want to close their doors choose to pursue Chapter 11 Bankruptcy which will allow them to enter into a payment plan that is monitored by a trustee where all debts must be paid off within a specified time usually 3 to 5 years.