Pros and cons of liquidating a company

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While there can be benefits to liquidation under Chapter 11 as opposed to Chapter 7, there can be some drawbacks as well.It should be noted that a Chapter 11 liquidation plan does not discharge all of your small business debts.But for those who already have sophisticated knowledge about starting and running a business, leveraging on other people’s money through a business loan or an angel investor is the best route to go.

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Generally, Chapter 11 is intended for the reorganization of businesses with significant debt, and may allow your small business to propose a plan for profitability post-bankruptcy and continue to operate while temporarily keeping your creditors at bay.Money will primarily come from your own savings, from the sale of some of your assets, or from liquidating personal investments.Advantages of Bootstrapping Using other people’s money (OPM) is an option that many consider when looking for business capital.So it's no guarantee that a majority of your creditors will sign off on a liquidation plan.Then again, some of those creditors may favor liquidation if they think it means they're more likely to get repaid.

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