Business Bankruptcy FAQ

Q: What does it mean to have legal representation as a creditor in a bankruptcy case?

An attorney can help a creditor file a proof of claim, object to discharge or reorganization plans, seek relief from the automatic stay, and pursue recovery.

Q: What is a proof of claim, and do I need an attorney to file one?

A proof of claim is the formal document registering what a debtor owes in bankruptcy. An attorney can help prevent filing mistakes that may reduce or disallow the claim.

Q: I received a preference or fraudulent transfer lawsuit from a bankruptcy trustee, what do I do?

Preference and avoidance actions seek to claw back payments made before bankruptcy. Potential defenses can include ordinary course of business and new value defenses.

Q: What happens to our HOA's claim when a homeowner files for bankruptcy?

HOA and condominium claims depend on the bankruptcy type. Some post-petition assessments may receive priority, and associations may seek relief from the automatic stay.

Q: Can I purchase assets from a bankruptcy estate?

Yes. Section 363 bankruptcy sales can allow buyers to acquire assets, real estate, or equipment through a court-approved process.

Question 1

Can bankruptcy save a company?

Accepted Answer

Yes. Chapter 11 bankruptcy can allow a company to restructure debt and continue operating while paying creditors over time.

Question 2

What's the difference between Chapter 11 and Chapter 7?

Accepted Answer

Chapter 11 is a reorganization process. Chapter 7 generally involves liquidation of assets to repay creditors and may lead to business closure.

Question 3

What happens when a business files for bankruptcy?

Accepted Answer

The business receives bankruptcy court protection, collection efforts are halted by the automatic stay, and the business works through the court process to address its debts.

Question 4

Can I start another business if I file bankruptcy?

Accepted Answer

Yes. Filing bankruptcy does not prevent someone from starting another business, though obtaining new credit may be more difficult in the short term.

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