When people think about bankruptcy, they often assume that it’s a sign of poor business moves and transactions. They might think that a bankruptcy is negative for a business, too.
The reality is that bankruptcy can be good for a business. In fact, if sudden changes in the economy negatively impacted your business, then bankruptcy could be a great way to get it back on track and to eliminate or streamline some of the debts that are holding you back.
Minimizing debts for your business’s future
With bankruptcy, either Chapter 11 or 7, you have the option of eliminating some debts and streamlining others. With Chapter 7 bankruptcy, you may be able to discharge all of your debts, so that you can close the business or reopen it without as much debt overhead.
With Chapter 11 bankruptcy, you may have the opportunity to reorganize your debts, so that you can repay them more effectively. Sometimes, a repayment plan can include reduced debts, so that you pay less than you would have if you didn’t choose bankruptcy.
Renegotiating for the greater good of your business
Another great reason to consider bankruptcy is that you’ll have an opportunity to renegotiate your debts and contracts. You may be able to renegotiate pay rates with employees in a tough job market or renegotiate rates for equipment or supplies. You might also be able to renegotiate contracts with third-party vendors to save money while keeping the contract intact.
When time matters, bankruptcy helps
Finally, one of the best benefits of bankruptcy is that it gives you time to assess your situation. Once the automatic stay goes into place, you’ll stop facing collections calls or other debt-collection issues. You’ll have the time to sit down and work out a plan that would help your business keep its doors open and thrive despite the current conditions.
Bankruptcies may be perceived as negative, but in reality, they have the potential to be extremely positive for your business. A good plan built during your bankruptcy could help you come out of the bankruptcy with a better business and stronger profits in the future.