Maybe you had a dwindling hope that last year's post-holiday sales could push your company from the red to the black. Sadly, as you enter the second month of the first quarter of 2020, you're forced to confront a dismal reality: Your small business is no longer viable.
New bankruptcy laws will be taking effect this coming February that can affect small business owners who may want to take advantage of the bankruptcy protections available to them under Chapter 11.
While there are several notable financial missteps that companies in New Jersey can make that ultimately require them to file for bankruptcy, there are other reasons why unsettling financial problems may occur that are sometimes out of their control. The ebbs and flows of supply and demand and the health of the economy are two factors that could contribute to a company's financial demise even if they have made valuable efforts to secure their assets.
In its heyday, fashion retailer Forever 21 earned a whopping $4.4 billion and made its founders rich beyond their wildest dreams. However, poor expansion decisions and a declining retail climate have resulted in the store filing for bankruptcy. Business Insider explains the factors that led to its decline and what this says to other brick and mortar retailers.
If there is a certain aspect of a business that isn't performing as well as others, many business owners choose to invest more time and money into it to improve its performance. This isn't always the best strategy, however, as the increased concentration may put other, more successful aspects in jeopardy. In this case, a business divestiture is a group of strategies that allows you to rid yourself of underwhelming assets in an attempt to make the rest of your business stronger. The Balance explains different types of business divestitures and how they work.
At William H. Oliver, Jr. & Associates in New Jersey, our legal team understands that the language of Chapter 11 bankruptcy is unique. For example, you may wonder what it means to be a debtor in possession.
When a company realizes that its financial situation will no longer allow the support of organizational processes, they may be considering alternatives to get rid of the debt. Unfortunately, if they have exhausted all other efforts, their only option left may be to file for bankruptcy in New Jersey. However, these types of situations can usually be prevented when company leaders take the initiative to strategically and wisely manage their finances.
If your New Jersey small business is struggling financially, you may wonder if filing for bankruptcy is a wise decision, or, more to the point, if filing for bankruptcy would jeopardize your personal assets. Intuit QuickBooks explores circumstances in which your assets may be at risk and what you can do to protect them in the event that your business defaults.
When a company is facing an uncertain financial future, they have a couple of options to consider in revitalizing their structure and recovering from the restraints of debt. Struggling companies in New Jersey may be able to develop a plan for consolidating their debt, renegotiate contracts with creditors to extend their payment period or file for bankruptcy to try and recover as many of their assets as possible.
Chapter 11 bankruptcy is reserved for businesses. It is a restructuring of debt. While all sizes of businesses can file under the chapter, things may be different for a small business than for a larger one. One of the important parts of Chapter 11, according to the U.S. Courts, is the creditors' committees. This committee is a group of the seven largest unsecured creditors. They investigate your business and finances and help to formulate the bankruptcy plan.