7 Things You Should Know About Corporate Bankruptcies

7 Things You Should Know About Corporate Bankruptcies

Hard work pays. You have worked up the ladder, and now your corporation is well-established and can generate great profits. You have invested money, time, and efforts and hired employees with the right skill set to achieve your business objectives.

Unfortunately, due to socio-economic factors beyond your control, your business is now struggling. You have lawsuits filed against your business, tax issues to handle, and perhaps some of your creditors are hounding you. The company’s board of directors has borrowed money to address an existing financial crisis or your finance manager has made a mistake.

Though the business is picking up, you’re running out of time. Or perhaps you’re facing some legal procedures that threaten the existence your company.

These are common occurrences in the business world. Though some of the factors influencing the profitability of your business are beyond your control, you can take some steps to keep your business running. You also dissolve it and start again.

For instance, you can seek professional advice and services of a tax lawyer if your main issue is related to tax. If you’re out of options, you can consider filing bankruptcy.

Well, bankruptcy isn’t such a good word for most businesses and people. However, it can be a powerful tool for corporations to reorganize their operations and financial obligations. The procedure also allows companies to discharge debts and dissolve their operations.

A tax debt lawyer can help.

Issues related to tax are one of the major challenges facing all businesses. Depending on the type of the tax and how long the debt has been outstanding, you could discharge it in bankruptcy.

However, this should be your last option. There are alternatives that can allow to handle your debts and keep your business operational.

Offer in compromise.

Professional Indemnity Insurance: How Important Is It to My Business?

This in agreement with the Internal Revenue Service to pay a lower amount than your company owes. Such agreements are a great option if your business can’t work out a good payment schedule.

Note that there is no guarantee your offer in compromise will be accepted.

Therefore, you require a professional and competent legal guidance to create a professional presentation to the Internal Revenue Service. Full documentary support is necessary to increase the chances of your offer getting accepted.

Another option is to make a lump sum payment to meet your financial obligations for below 50% of your tax debts.

Installment agreement.

In case you’re incapable of making a lump sum payment to meet your debt repayment target, you can consider repaying these debts in installments. Just like the offer in compromise, there is no guarantee that the IRS will accept it.

Thus, you should get a lawyer who has been succeeding in handling such cases for your presentation to be accepted.

Either of these options can help you make significant savings and give your business stakeholders the confidence that your corporation will survive the crisis.

Is Chapter 11 Bankruptcy an option too?

For a corporate intending to file bankruptcy protection, your choices include chapter 11 bankruptcy, a reorganization, or liquidation or chapter 7 bankruptcy. If you intend to keep operating even after filing the bankruptcy, then, chapter 11 bankruptcy is a perfect option.

It’s worth noting that going bankrupt is usually a complex process and should be handled by a professional bankruptcy or tax debt lawyer. Prior to filing your bankruptcy, consult a popular attorney who has been handling chapter 11 bankruptcy cases successfully.

Every chapter 11 bankruptcy is unique. Your company may be in a situation that forces into an involuntary chapter 7 bankruptcy. Note that chapter 11 bankruptcy allows you to reorganize your corporation to exit the liquidation of the company assets.

The last option could be liquidating the company so that the highest value gets paid for the company assets.

No more harassment.

In bankruptcy protection, all collection activities are stopped. It also protects the corporation from all legal proceedings related to the company in accordance with the bankruptcy code’s provision of automatic provision.

Any form of automatic stay violation by creditors may subject them to heavy penalties. These violations include harassing phone calls and correspondences demanding debt repayment.

Time to implement effective strategies.

How to Create an Effective Survey for Your Business?

Once you file bankruptcy, you and your lawyer with the assistance of a professional financial analyst, will prepare the right documents and present a robust debt reorganization plan to a designated committee of your creditors.

Every creditor wants to be paid, and the chances are that most of your creditors will be flexible. However, it’s wise to eliminate all unproductive workers, unfavorable contracts, and eliminate all ineffective practices and strategies.

You can also consider closing stores as your lawyer negotiates new deals with unions and suppliers. Note that bankruptcy allows you to void all restrictive and burdensome leases. These leases can be redone on favorable terms and conditions.

Once you present a workable and reasonable plan for operations and marketing of the business, that’s good news. Your creditors may accept it even if it means that they will get lower payment than your actual financial obligations to them.

Liquidation: Chapter 7 Bankruptcy

Perhaps you have tried all other options, and nothing is working. Your corporation is handling several lawsuits, you’re really struggling to finance your daily operations, your workers are on strike demanding increased salaries and repayment of overdue salaries, and you’re struggling with other financial issues.

In case your corporation reaches the breaking point, your financial advisors and counsel may advise you to opt for a liquidation.

Once you file chapter 7 bankruptcy, a trustee will take control of the company’s operations. He or she will continue running the business for some time and oversee the process of collecting, marketing, and the sale of the company assets.

Your company may continue selling its shares on Nasdaq, New York Stock Exchange, or on Pink Sheets and OTCBB.

Keep in mind that in chapter 7 bankruptcy, all secured creditors such as banks are usually paid first, or their collateral is collected first. The company owners are paid next if anything remains.

Always seek legal advice in case your company is facing financial issues or even lawsuits that can have a significant impact on the viability of your corporation.

About The Author

Catherine Park is a connector with Caffeinated who help businesses find their audience online. She loves working in the ever-changing world of digital and is fascinated by the role content plays in today’s marketing.

Some of the factors influencing the profitability of your business are beyond your control. But you can take some steps to keep your business running. You can seek professional advice or you can consider filing bankruptcy. Here are 7 things you should know about corporate bankruptcies:

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How This Family Guy Makes $10,000/Month Online Teaching Others How to Make, Save and Invest Money

How This Family Guy Makes $10,000/Month Online Teaching Others How to Make, Save and Invest Money - Interview with R.J. Weiss from TheWaystoWealth.com

This is an interview-style post with R.J. Weiss from The Ways to Wealth.

Hey R.J. What’s your background and what do you do?

I blog about all things personal finance at The Ways to Wealth.

Before I went full-time into blogging, I spent ten years in the financial services industry. Specifically, helping families buy the right type of life insurance.

During my time with a full-time job, I’ve always had different side hustles going on. From freelance writing, Amazon FBA, conversion rate optimization, to website design — there were many projects I pursued outside of work.

How did you start your career in finance?

I got started in finance straight out of college working for my the family insurance business. As I love the financial planning side of things, I choose to specialize in life insurance planning. This led me down the path to obtaining the CFP® Certification.

What made you start blogging?

The Ways to Wealth, which I started in 2016, has been my 5th blog.

The others mostly fizzled out most due to a lack of interest. But, in 2009 I started a personal finance blog called GenYWealth.com (no longer around) that had some success.

The idea GenYwealth.com was to write about what I was learning about studying to take the CFP®. The blog was, by all means, a success. I was able to gain valuable knowledge, pass the CFP® exam, earn some extra money and build up a good community.

I then took this knowledge and started a business blog, which allowed the insurance agency I was working for to generate leads.

I started The Ways to Wealth because my passion is personal finance–from investing to travel hacking, I love the challenge of optimizing my finances.

How was The Ways to Wealth born?

I didn’t have much of a plan for starting The Ways to Wealth when I purchased the domain name.

I was actually thinking it would be a niche site, which was inspired by Pat Flynn’s niche site duel. Then, I came across the income reports of Michelle Schroeder-Gardner and wisely changed direction to a more traditional blog.

This change came about 6-months after starting to blog.  I did a timeline of the site in one of my income reports.

What worked best when trying to grow the site?

I had a decent knowledge of SEO. So at first, I started growing the site with email outreach. One of the first posts I had about best investing books of all time, had about 15 links to it.

This was nice to start with but was quite slow to build up, as it can take a while to earn Google’s trust.

The big turning point came when I started to understand Pinterest. I spent a few frustrating weeks on the platform, then it finally started paying dividends.

I went from about 100 sessions a day to 1,000, which was huge for me at the time.

How did you get to 3 million monthly viewers on Pinterest?

the ways to wealth pinterest 3 million monthly views

I lay out my Pinterest strategy here. But at the core the idea is to:

1) Write high-quality content that Pinners want to click through, read, and share.

2) Pin to my own and high-quality group boards, with a keyword-rich description.

3) Continue to Pin my best pins across my own boards/group boards, ruthlessly eliminating Pins that don’t perform well.

One thing to keep in mind is impressions don’t mean much on Pinterest. What counts are clicks to your website. So, you want to design not for impressions but clicks.

What aspects of the online business are you outsourcing or automating and how?

The first thing I outsourced was Pinterest design. I’ll design about 30-40 pins a month, so this was big time saver for me.

Of course, it took some work to get going. At first, I hired 5 or so people on Fiverr. I found one decent designer but the work quality deteriorated over time.

I then went to Upwork and posted a job for a  graphic designer. I found a great team down in Argentina, who I’m very happy with.

I’m currently experimenting with working with a ghostwriter. A few of my latest posts have been transcribed from my recording, with the ghostwriter making sense of it all.

I can compile about 3 posts in 90 minutes, then take another 90 or so minutes to prepare them. Saving me around 3-4 hours per post this way.

What’s your main income stream and why do you think it works for you?

My main source of income for the blog is affiliate revenue. It works because the partners I do have are high-quality businesses, who deliver value and solve real problems. This makes it easy to naturally link to such a partner.

When did you start making more than $10K/month and what was the turning point?

My first month over $10K was in January of 2018. In December of 2017, income was around $3,000 and in July of 2017 around $500. So, it was definitely a jump.

What happened then in January?

First, personal finance is at its peak interest in January.

Second, I had multiple Pins go viral.

Third, in November I started driving traffic via Facebook to the site. So, in January I could take campaigns I’d been fine-tuning for a few weeks and scale them.

How do you balance work and family life?

I have a routine I stick to Monday through Friday.

When inside of my designated working hours, I work. When outside of these hours, I’m not.

This is a lot easier said than done. But the thing important for me is not to take work everywhere I go. This means I don’t have any apps on my phone that are work-related (email, analytics, etc..)

What are you 3 best finance tips for newbies?

  • Focus on your savings rate. How much you save is the most important decision you’ll make.
  • Small incremental improvements add up over time. My favorite example is increasing your savings rate 1% every quarter, means you’ll be saving 20% of your income in just 5 years.
  • Study happiness. Become a student on how to increase your level of happiness. The natural result is you’ll want less overtime, making the game of personal finance a lot easier to win.

What books, blogs or podcasts help you stay motivated along the way of growing an online business?

I read a fair amount to keep fresh ideas in my head.

My favorite podcast is The Tim Ferriss Show.

Two blogs I enjoy reading are:

Farnam Street
Barking up the Wrong Tree

And as far as books. I try to read one a week. A few books I would recommend to online entrepreneurs would be:

Deep Work by Cal Newport
The Compound Effect by Darren Hardy
The Four Hour Work Week by Tim Ferriss

Pin this post if you enjoyed the interview.

Check out my interview with R.J. from TheWaystoWealth to see how he entered the finance niche, started making money blogging, began bringing traffic from Pinterest and monetizing it with affiliate marketing, and is now making $10,000/month from his online business. #blogger #interview #blogtraffic #incomeideas #income