Corporate Bankruptcy Attorney

When a company needs a corporate bankruptcy attorney, the owners should become familiar with the types of firms that represent companies through financial difficulties to determine which firm would best represent the needs of the company. Because bankruptcies are some of the most complex areas of law in the United States, companies need to bring in experts who can help the firm find its way through those laws. In fact, when filing, the lawyer will need to deal with contract law, tax law, corporate law, and real estate law. If the failing company owns real estate or has other assets, the importance of hiring business bankruptcy attorneys is even greater to preserve these assets. Once the firm files for protection under these laws, the court will administer immediate legal protection from creditors; however, the paperwork for the filing must be done correctly or the court may refuse to hear the petition, leaving the company open to further action from the creditors.

During most bankruptcies, the company will devise a plan to handle its debt and yet still continue doing business to be able to make profits and thereby be able to adhere to the payment plan agreed to in the court's proclamations. This means that the company must have a plan that recognizes its obligation to repay the debt owed and at the same time give enough breathing room to conduct business. The most common type of petition to file is called a Chapter 11. The other types of bankruptcies are for people other than businesses. For example, Chapters 7 and 13 refer to individuals and chapter 12 refers to farmers. A decline in sales can lead a business to amassing debt it cannot repay, so a corporate bankruptcy attorney will not only examine and advise the business on how to approach the court, but also will urge the business leaders to change business practices so that the downward trend will take an upward turn. That means that the company may also need to hire experts like corporate accountants to show it where the business practices need to change to optimum sales advantage. Sometimes, the downturn is due to a sudden loss of revenue that makes it difficult to pay suppliers and other creditors. This could come from contracts with other firms that are not longer renewed, some wrongdoing on the part of an employee that results in a lawsuit or government fines, or even a drop in stock prices. At this time, creditors may force the company into filing, especially if the creditors find that the owners are selling off assets to pay debts. Business bankruptcy attorneys can help owners file in emergency situations where these creditors are harassing them.

A corporate bankruptcy attorney can advise the organization it represents on how the laws are written in the state in which the organization is located. This is an essential part of the representation; therefore, business bankruptcy attorneys should practice in the state in which the petition will be filed. An important distinction in developing a plan with the courts is to understand the difference between secured and unsecured debt. Secured debt is that which is connected to assets such a property. Unsecured debt is debt such as credit cards which are not backed up by assets. Unsecured debts can be discharged, or eliminated by the courts. That is not possible with secured debt. A debtor has two options: either he can make the payments and make up the back payments or let the asset by repossessed. Creditors can have legal rights to the secured debt, making claims on the organization's assets. But complications can arise if the assets have claims on them such as loans or liens against property. Creditors may take out liens against intangible assets such as patents, trademarks, or intellectual property. Even if property has a lien, a creditor can still repossess it under certain terms. The court will also pay secured debt first in a settlement.

The corporate bankruptcy attorney will arrange for a debt adjustment, or a plan to repay the debts that the organization can handle with the current financial situation. Some of the debt may be discharged, leaving the company with less of a credit burden than before. A discharged debt is one that can be erased through the action of the court. A non-discharagable debt must be repaid, even though the terms may change. During a Chapter 11 petition, the business can continue to function normally, while maintaining control of its assets as bankruptcy attorneys help the owners reorganize the debts. In 2005, the repayment time allotted changed. Before 2005, businesses had an almost unlimited amount of time to reorganize. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 changed that by imposing a 120-day limit for a firm to come up with a viable plan that the court can accept. If the debtor has not submitted a good plan in that amount of time, the creditors can file their own plans, forcing the firm to repay according to their plans. That, of course, may put the firm in even further distress. This new law also requires that the filer must have lived in the state of filing for two years. Each state also requires different time limits for reorganization plans, qualifications for exempt assets, and limits on income subject to liquidation. In the past, many companies shopped around for a state with the best regulations concerning court's decisions, but because of the new two-year rule, businesses can no longer do this.

Hiring a corporate bankruptcy attorney is a serious decision which should be taken after careful advisement. The Bible tells us to seek good counsel, "Every purpose is established by counsel: and with good advice make war" (Proverbs 20:18). Check out the business bankruptcy attorneys in your area and choose one who is honest and diligent in representing the claims of his client.

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