Bankruptcy

Hello, once again! Today's topic is a very interesting one: How does a company handle going bankrupt. Bankruptcy is becoming more of a reality in this volatile economy for many families and businesses. It is a means of clearing debt to establish financial stability. The purpose of bankruptcy is to build and restructure a business by liquidating assets to clear monies owed, also offering relief of harassment from creditors. Reduction of debt occurs by the organization or individual making an effort through the courts to satisfy and writing off accounts in arrears.

Organizations manage the risk of bankruptcy to maintain current operations and to build the existing business without closing because of the allocation of income to debt. In my humble opinion, Chapter 11 is the most efficient for corporations partly because it relieves financial commitments to outstanding contracts and leases. It allows businesses to allocate a plan for reorganization of debts owed. This lowers the risk of failure because it forces the organization to create a restructuring plan to analyze current financial scheduling downfalls (i.e. income, expenses and liabilities) which forced them into the initial filing of bankruptcy.

One method for the avoidance of financial corruption is through asset management. Flaster/Greenber focuses on the prevention of bankruptcy through careful risk management solutions. They evaluate the existing financial conditions and counsel on ways to reduce the risk of losing assets. The “privatize your life using asset protection strategy” article offers similar insights of protecting assets by methods separating assets and identity, creating a structured plan, timely protection of assets and knowing the opposition. I believe that with these methods of analyzing and evaluating risks, organizations can better control and prevent disrupting business practices.

(1) http://bankruptcy.lawyers.com/commercial-bankruptcy/Business-Bankruptcy-FAQ.html

(2)http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html

(3)http://www.flastergreenberg.com/

(4)http://asset-management.bestmanagementarticles.com/a-29495-privatize-your-life-using-asset-protection-strategy.aspx