Bankruptcy may sometimes be another part of the overall business cycle. Financial reorganization has pros and cons; sometimes bankruptcy is the most appropriate choice for a company in West Virginia. When business owners approach bankruptcy efficiently, they can experience all its advantages while limiting its downsides. One way to accomplish this goal is to seek guidance from a qualified business law firm in West Virginia, such as Zeni Law.
Determining the actual value of the assets on offer is a critical concern with asset purchase agreements. Buyers should ensure that the price they pay for assets matches the assets’ face value. Additionally, when purchasing all assets on an entity’s books, the buyer must accurately assess potential liabilities, as many companies may adjust their books to make their finances seem more attractive to potential buyers. Further complicating the buyer’s due diligence, in addition to the potential liabilities hidden in the assets purchased, they must also consider the potential tax implications of some asset purchases.
A Chapter 7 bankruptcy is one of the most common types among individuals and businesses. Under the terms of a Chapter 7 bankruptcy, the debtor must liquidate all assets except the bare necessities.
Companies choose this option when reorganization is not likely to return the business to solvency. Once a company liquidates its assets, it can escape most existing debt-related liabilities. Only entities that meet specific income requirements may pursue Chapter 7 bankruptcies.
Chapter 7 can be a suitable choice when debts are far too high for any realistic repayment strategy, even under the more lenient terms of a Chapter 11 bankruptcy. Assuming the company has chosen a structure that provides limited personal liability, a Chapter 7 bankruptcy should not affect personal assets such as cars, homes, and other valuables. Furthermore, certain company assets may be excluded from Chapter 7 – including work-related tools.
This type of bankruptcy falls under Chapter 11 of the United States Bankruptcy Code, also called a “reorganization bankruptcy.” A frequent choice among struggling corporations, this type of bankruptcy requires a clear plan detailing the restructuring of debt and reorganizing the company assets. The benefit of this approach is that after the company carries out its reorganization plan, it may stay in business.
Chapter 11 bankruptcies may be suitable if there is still hope of success for the business. If business operations can continue, the resulting income may help settle debts. Creditors often understand this; in many cases, they will not stand in the way of restructuring. Creditors often create and propose the reorganization plans themselves.
The bankruptcy court will only allow a Chapter 11 bankruptcy to move ahead if it believes this process will serve the best interests of all parties. There is no guarantee that the court will provide this approval. In addition, Chapter 11 bankruptcies are both complex and expensive.
An Asset Purchase Agreement or “APA” is a contract that facilitates the sale of business assets. In the context of bankruptcy, these sales are usually caused by financial pressures. A company going through bankruptcy may be forced to sell its assets in this manner. In some cases, all purchases may go to one buyer, while there may be multiple purchasers of separate holdings in other cases. The details of such agreements may vary greatly, especially regarding payment terms. The contract may stipulate monthly installments, liens, etc.
There is no need to have asset purchase agreements notarized in West Virginia, as the presence of signatures is usually enough to make these contracts legally binding. The business attorneys with Zeni Law have experience drafting these agreements and can provide perspective. As with many other business contracts, asset purchase agreements generally fall under rules set out by the Uniform Commercial Code (UCC). Aspects of asset purchase agreements may also fall under the Securities and Exchange Commission (SEC) authority, so seeking advice from legal professionals such as those at Zeni Law is vital.
Discharge is the end goal of bankruptcy filings. When the bankruptcy court grants a discharge, the debtor is no longer liable for paying those debts. If any obligations remain outstanding after a successful bankruptcy proceeding, the debtor will not be required to pay them. Once granted by the bankruptcy court, a discharge makes it illegal for creditors to seek repayment of outstanding debts. A discharge notice may specify legal penalties for any creditors who continue to pursue unpaid debts in the future.
From Chapter 11 to APAs and discharges, there are many options and possibilities when approaching bankruptcy in West Virginia. Companies should consult an experienced business law attorney to navigate this legal framework effectively. Choose Zeni Law to discuss bankruptcy-related questions in greater detail and receive personalized guidance not available through online research alone. Contact us today to get started.
