A corporate bankruptcy lawyer specializes in situations involving public company bankruptcies. According to federal bankruptcy legislation, public firms can apply for Chapter 7 or Chapter 11 bankruptcy. Any rated bankruptcy attorney in Maryland will tell you that most businesses prefer Chapter 11 over Chapter 7. Before we get into this, let’s look at each chapter first. Shall we?
Chapter 7 bankruptcy filing
Several events will occur when your bankruptcy lawyer encourages you to file for chapter 7 bankruptcy lawyer Maryland. If you file for Chapter 7, all of your company’s operations will be halted. In other words, your company will go out of business entirely.
The court appoints a trustee. The trustee’s role is to sell all of the company’s assets. The money gained is then used to pay down the company’s debt. Investors with the lowest risk are compensated first. To put it another way, secured creditors are paid first. Bondholders are paid first since they represent the company’s debt.
Stockholders are compensated last in business bankruptcy, according to bankruptcy law. That is if any selling proceedings are still open. This is because stockholders own the company and are willing to take on more risk than secured investors. Stockholders profit when the company is doing well and stand to lose the most when the company is in a slump.
Chapter 11 bankruptcy filing
The bankruptcy processes take a different path under Chapter 11. In Maryland, your corporate bankruptcy lawyer will urge you to file under Chapter 11 because it allows the debtor company to reorganize and attempt to re-enter the market. When a Chapter 11 petition is filed, a committee is formed to devise a reorganization plan. Under Chapter 11, the firm operates daily, but the bankruptcy court must approve all key decisions.
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The Bottom Line
You must understand that corporate bankruptcy is lengthy and costly as a debtor. It is a procedure that must be carried out with the assistance of an internet attorney that specializes in business bankruptcy. You cannot rely on a general bankruptcy attorney; you must seek the assistance of a rated bankruptcy attorney in Maryland.
Aside from being a time-consuming process, bankruptcy can have major and severe consequences for a corporation. This can harm your credit. A business bankruptcy lawyer in Maryland (such as RLC Lawyers and Consultants) will give you all the professional assistance you require. A successful and legal bankruptcy will provide you with the fresh start you seek.
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