Bankruptcy Alternative: Sale of Business

When your business is drowning, instead of filing for bankruptcy sale of business can be chosen as an alternative solution. As the bankruptcy laws and the proceedings are time consuming and rigorous, you may opt to choose alternative methods for bankruptcy when all your efforts to manage your debts fail. Another reason for choosing an alternative is to avoid the bankruptcy from entering your credit report. You could settle the problems in business either out of court or by sale of the business itself. Find details of sale of business alternative in this article.

Sale of Business

Under the state’s jurisdiction, a business can be sold or liquidated for the benefits of the creditors. It is referred to as assignment of business to the creditors. This is an easy and simpler alternative to the time consuming and uncertain Chapter 7 liquidation bankruptcy. Here, the sale of business does not intend to revive or reorganize the business. A third party assignee will overlook the liquidation procedure and would be responsible for settling the debts of the business’ creditors. This assignee is selected by the owner of the business alone or after a consultation with the creditors.

Process of Business Assignment

On filing a schedule of assets to the assignee, he or she will notify the creditors of the business. On receiving the notice, creditors have to file their claim and this issues an automatic stay for the collection processes of the creditors. The assignee then will sell the assets and use it for debt clearance.

Advantages in Sale of Business

The most important advantage one derives from the assignment or sale of business is the least time taken for processing and liquidation. Another advantage is that the owner gets a chance to sell the assets to the buyer who quoted a maximum value. The sale deal can also be finalized immediately in order to clear the debts as early as possible. One more advantage of this alternative is that fee for the assignee can be negotiated and can be adjusted as per the value of the business assets involved in the sale. As a general rule, the fee is calculated as certain percentage on the total funds given to the creditors.

Getting Legal Help

Though there are some plus points in this particular bankruptcy alternative, it can lead to many problems if one or more of the creditors do not agree or abide by the directions of the assignee. It is better to consult an experienced attorney before you decide to take the alternative solution for the business bankruptcy.