Small Business Bankruptcy

Statistics have it that in the past financial year a total of 65% of the businesses that filed for bankruptcy were the small businesses. It is very hard to start any kind of business, more so the small business. Many of the proprietors of these businesses tend to borrow loans to get capital for starting or to expand their businesses. It is because of this that majority of the small businesses face financial ruin today.

Business bankruptcy for small business should merely be considered after all other options have failed. Pre-pack administration is one of the solutions which can help out the small businesses. If this is not viable, then the business has to consider bankruptcy. There are two options for these businesses which choose bankruptcy depending on whether they want to close up for good or continue.

Closing up will go hand in hand with chapter 7. This entails selling all the business assets and using the finances to pay off the creditors. This will mean that the business has to be closed for good. The other option is using chapter 11 which will mean that the business persons will be allowed to continue operating the business, all the while under supervision form the court. The payment of the debts will also be restructured.