Businesses that are struggling to keep up with their financial obligations may consider bankruptcy as an option. While there are many cases in which bankruptcy can help a financially distressed business and actually may allow it to stay operational, there are other alternatives that should always be explored. The business bankruptcy attorney can assist businesses that are having cash flow problems and work with them to explore every option they have, including bankruptcy. There are many ways that an attorney can help businesses with financial problems short of filing for bankruptcy, two of which are discussed below. For specific advice regarding your case, call our office today.
Attempting an Out-of-Court Workout
An out-of-court workout is exactly what is sounds like – an attempt to work out an arrangement with creditors without going to court. Some issues to consider when determining whether an out-of-court workout may be appropriate in a particular situation include how long the company can continue operating in its current state and whether foreclosure or repossession is imminent. If possible, an out-of-court workout is almost always preferable than filing for bankruptcy.
While this type of resolution to a financial problem does not involve going to court, it is nonetheless highly advisable for businesses pursuing an out-of-court workout to do so with the assistance of an experienced lawyer. These situations often require a significant amount of negotiations to resolve and generally involve the parties coming to an agreement that will be memorialized in a formal written contract. A lawyer can significantly strengthen a business’s bargaining position when negotiating with creditors and can ensure that any agreement reached is in the best interests of the company.
An Assignment for Benefit of Creditors
Another way a business that is struggling with its financial obligations may be able to avoid bankruptcy is through an Assignment for the Benefit of Creditors, an option that is created by state law. In these actions, a business assigns legal and equitable title of its assets to a third party that is known as the assignee, who holds these assets in trust for the benefit of the business’s creditors. Some of the benefits of using an Assignment for Benefit of Creditors include that they are often faster than a bankruptcy proceeding, and the parties have full control of the way in which the transaction occurs.
Contact a Business Bankruptcy Lawyer Today to Determine How We Can Help You
Businesses that are overextended financially often have alternatives to filing for bankruptcy. Because of the complexities involved in managing and negotiating business debts, it is highly advisable to retain an attorney familiar working with corporate clients prior to filing. If you would like to learn more about what your company’s options might be, contact a skilled bankruptcy law firm Memphis, TN relies on to schedule a confidential consultation.
Thank you to our friends and contributors at Darrell Castle & Associates, PLLC for their insight into bankruptcy and alternative to business bankruptcy.