Startup Funding Espresso -- What is Bankruptcy?

What is Bankruptcy?

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Business bankruptcy is meant to protect the personal assets of the owners of a firm.

It gives your company a fresh start by relieving the business of debts.

There are several types of bankruptcies.

Consider these options for your business:

Chapter 7 -- Liquidation

This shuts the business down and pays the creditors from the assets remaining.

Use this type of bankruptcy if the business is no longer viable even with the debts removed.

Chapter 11 -- Reorganization

This reorganizes the business and shows a plan for how to repay the creditors.

In most cases, the creditors will lose a portion of what is owed them.

If they can recover a portion of the debt that is better than losing it all. 

Chapter 13 -- Personal bankruptcy

This reorganizes a sole proprietorship business in which the owner's personal assets are mixed with that of the business.

It creates a plan to repay the debt over the next three to five years.

Bankruptcy does go on the business owner's credit report.

Consider these options for your startup that is undergoing a turnaround.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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