BankruptcyBusinesses who have failed to balance large amounts of debt are ready or should be filing for bankruptcy. By filing the bankruptcy we can solve the financial problems the company is facing or start over. Even though we pay all our debts or some of them, still they will be on company’s credit report for ten years.
In this context company may not get a loan from the bank. Bankruptcy is a very serious problem because company is going through a very problematic period. Company should hire a lawyer to find a solution and get rid of legal duties as a company. Bankruptcy may help the company to pay some debts like: medical debt, utility debt, credit card debt, bills etc.
By developing the company’s bankruptcy many of the actions done by the company in the past can not continue normally without the approval of an expert. The company is responsible for its liabilities which are divided as limited or unlimited. Unlimited liability refers to the legal obligation that a company may have meaning that they are liable for all business debts (personal assets)if the business can not pay its own liabilities .
Limited liability is where a persons financial liability is limited to a fixed sum mostly it is equal with the total investment made in the company or partnership. Depending on the type of liabilities if it is unlimited or not can cause the lost of personal assets like foreclosure on your home or other property. The stockholders are forced to return their property even though it has been repossessed. We should also think about the wages for employees that haven’t been paid yet and getting utility service back or keeping it from being cut off. Even we file the bankruptcy that doesn’t mean it will fix all financial problems. Debts will be still there and need to be paid so we should have higher income and less expenses in order to pay them. Some debts are not included in bankruptcy law .
After the company filed the bankruptcy the “automatic stay” has been reported this means that company is still on the market and operating daily activities as any other day. In this case the bankruptcy is pending while creditors are prohibited to take actions against debtor.There is a chance for the company’s that are facing bankruptcy they can try to get back the revenues they earned and manage it in a better way. They organize it in order to recover from the weaknesses and bad leading that company had. Reorganization is an advantage for corporations, they make new plans for activities in the future and new leading tactics that will help it recover and still exist in the market. Sometimes even reorganization can not help the business to survive and if that happens they go to liquidation. By this we mean the business is closed where property and assets of the company are diffused. If we fill the bankruptcy that doesn’t mean we are closing the company because bankruptcy has some advantages and also some disadvantages.
Most important advantages are:• The taxes that have not been paid for over 3 years go away• Missed debt payments will lower Your credit and it can cause complications if we want to lend it to someone so rather we fill the bankruptcy• If we declare bankruptcy company needs to raise credit account and use plans to pay all of his debts.• It allows you to have a new start and fix all the problemsSome of the disadvantages are:• Almost all of tax debts are nondischargeable• For some period of time our credit account will be ruined• Declaring the bankruptcy may effect bad in some aspects• Bankruptcy is kind of embarrassment for the name of the company.In Republic of Albania the Ministry of Justice is the institution responsible to draft new laws for bankruptcy .There are 99 article about the bankruptcy. Although the Bankruptcy Law was modeled in the main part under German law bankruptcy, it is procedurally and essentially more similar to the law of the state of insolvency and bankruptcy of many jurisdictions of Western Europe and North America.
The law of bankruptcy in Albania is drifted to make sure while filling the bankruptcy debtor will get rid of debts and his property will be liquidated to pay them off . In the United States, bankruptcy is a matter governed by federal law. There are several types of bankruptcy that may be filed: • Chapter 7 – also known as bankruptcy or direct liquidation and requires the debtor to sell the property in order to pay the creditors; •Chapter 9 – also known as municipal bankruptcy; • Chapter 11 – also known as reorganization, which is used by businesses and individuals with large debts; • Chapter 12 – Reserved for family farmers • Chapter 13 – known as debt adjustment and requires the debtor to submit his plan to pay his debts out of the existing income.
Which one of the bankruptcy best suciu you can choose by checking your financial state. In order we need to consult with an expert for the best decision. Different states treat bankruptcy depending on the state in which a business organization operates.
Larger states with larger commercial companies have sophisticated bankruptcy, reorganization and liquidation legislation, and some of them review these cases through specialized. So company’s get into this situation because of the bad managing or other company’s that are powerful in market which are a big competition for these companies. This is a risk to rescue company even though sometimes is hard to keep it in market and operate normally as before. Recovery may be so long some companies for example need about 5-10 years or close forever. For large companies that pass through bankruptcy there is a loss even for government. Facing this situation is hard because losses are big.