Business Bankruptcy Alternatives: Assignment for Benefit of Creditors
When your business has reached a point where it is no longer able to pay its debts, and there is little hope of turning it around, you need to figure out how to settle your debts with creditors. Whenever possible, it is in your best interest to avoid going through the lengthy, and often costly, process of bankruptcy. For many businesses in this situation, a process known as an Assignment for the Benefit of Creditors is preferable to actual bankruptcy. As your local Southfield bankruptcy attorney, our goal is always to help you find the absolute best solution for your situation. We always treat our clients with a high level of professionalism and personalized service. Read on to learn about options other than bankruptcy for your business.
The Important Benefits of This Bankruptcy Alternative
Under this option, you would assign all the business assets to a designated party. The assignee, which is a third party individual or group selected by you, often with the input of creditors, would then handle making the arrangements for selling any assets and distributing the proceeds.
There are several important benefits to using this option rather than traditional bankruptcy, including the following:
- Speed – Since you don’t need to wait for your case to go through the bankruptcy court system, everything can typically be completed much more quickly. This is a significant benefit for both you and the creditors.
- Maximum Sales Value – The assignee involved is required to do their best to get the maximum price for all the assets that they are selling. Depending on the type of assets your company has, this can result in a significant benefit for your company.
- Less Compulsive Sales – Going through a traditional bankruptcy process means that the courts are able to force you to sell assets by certain times, which can limit the amount of money you can get for them (especially in some industries where there is seasonal demand). With the assignment for the benefit of creditors’ process, there is more leeway provided to the assignee.
If your business has assets that are sufficient, or nearly sufficient to cover the debt that you owe to creditors, this is an excellent option to consider as an alternative to bankruptcy. In the event that your assets are greater than your debts, the owners or investors of the business will be given all proceeds that are left over after paying all creditors and the assignee fees.
If you are interested in learning more about this process, please contact us today. We’ve helped many businesses like yours find alternatives to the bankruptcy process – and we’d be happy to help you assess your options. Talk to a local Southfield bankruptcy attorney today!