A Guide for New York Businesses Exploring Bankruptcy
As a business operator, staying on top of local regulations is a vital part of running a successful and sustainable venture2 min read
As a business operator, staying on top of local regulations is a vital part of running a successful and sustainable venture. One regulation that all business owners in New York should be aware of is bankruptcy. The bankruptcy definition has far-reaching implications and should be clearly understood can be a daunting challenge. Businesses must be able to make informed decisions regarding bankruptcy and how the process could benefit them, and there are a range of factors they must be aware of. To help business owners and executives better understand the bankruptcy definition, as it applies to them and their local laws, this guide offers a comprehensive overview of the key points they should consider.
What Is Bankruptcy?
Put simply, bankruptcy is a legal process designed to help businesses in financial distress. The bankruptcy definition enables businesses to eradicate or restructure their debts in order to make repayment for them more manageable. Depending on the circumstances and the laws of the state or jurisdiction, there are different types of bankruptcy. Each has its own implications and provisions, and it is important to understand these and understand which type of bankruptcy could be the best fit for a given business’ situation.
Who Can Declare Bankruptcy?
To answer this, businesses must refer to the eligibility criteria outlined by the laws and regulations noted in the bankruptcy definition they are typically governed by. Most state or jurisdiction-specific laws require that businesses must have at least three debtors to file bankruptcy. Furthermore, they must have assets equal or greater than their liabilities or debts in some jurisdictions. It is important to ensure a business meets the conditions stipulated by the applicable law under the bankruptcy definition when it comes to which entities are eligible to file for bankruptcy protection.
Different Types of Bankruptcy
Chapter 7 Bankruptcy
Under the bankruptcy definition used in this type of bankruptcy protection, businesses must employ a trustee to manage assets. This type of bankruptcy is suitable for businesses with little assets and could result in debts being liquidated to repay creditors.
Chapter 11 Bankruptcy
This type of bankruptcy enables businesses to keep valuable assets while seeking protection from creditors. Businesses also have the benefit of being able to remain operational during the process.
Chapter 13 Bankruptcy
Unlike chapter 7 bankruptcy, businesses keep their assets under this type of bankruptcy protection. It is suited to businesses owned by those with a stable income level who can make monthly payments to creditors for the duration of the process.
End thoughts
Ultimately, coming to a full understanding of the bankruptcy definition outlined in the applicable laws and regulations for businesses in New York can be extremely beneficial. By familiarizing themselves with the different types of bankruptcy and eligibility criteria, business owners can be better equipped to make informed decisions and protect their businesses during difficult times. For those seeking even more legal assistance, local professionals or UpCounsel’s online lawyer network can offer the guidance and legal support they need.
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