Although most people know what bankruptcy is, they may not know what the process of declaring for bankruptcy entails.
While it is perceived as being the last step for a company that is going out of business, this is not always true. In some cases, bankruptcy can be a way for a company to reorganize its debts and come out even stronger than before.
Why Would a Business File for Bankruptcy?
A company may wish to file for bankruptcy for several reasons.
First, it may not have enough money to pay all of its creditors. Therefore, filing for bankruptcy would enable them to pay creditors depending on priority. Most unsecured creditors would get nothing while secured creditors would be paid back up to the amount that remaining assets are worth. Continue reading