Bankruptcy for Business Owners and Its Implications for Suppliers

Macon Georgia Bankruptcy Lawyer | Bankruptcy Attorney Macon GA

If you are a businessman and you are considering the bankruptcy option for managing or discharge of your debts, it is of utmost importance that you realize the importance and implications of such an action. Of special mention is the effect of your bankruptcy on your suppliers. The type of bankruptcy you are planning to file for decides the effect on other aspects of your business like your suppliers.

Chapter 7 bankruptcy allows all your debts to be discharged along with your obligations to your creditors. A chapter 11 bankruptcy allows you to continue your business and use revenue generated to pay off your debts according to a court supervised repayment plan as well as subject your business to an operational reorganization for more efficient functioning. 

Chapter 7 Bankruptcy

In the event of a chapter 7 bankruptcy filing, it is advisable that all your suppliers, each and every one of them, file a proof of claim with the bankruptcy court clerk as soon as they are notified about your bankruptcy petition by the court. The proof of claim will provide supplier with right to recover at least a part of the money owed to him via discharge of your debts. Under normal circumstances, you assets would be liquidated recovered money used to pay off your debts including those owed to your suppliers.

If you have suppliers to whom you owe secured debt like the person who supplies equipment and maintains a lien on it, it is possible that they might be able to get their equipments back or money equivalent to its value.

In many cases, suppliers can begin an adversary proceeding against you, if he believes that your bankruptcy filing is not in good faith. He can cite hidden assets as impropriety in your bankruptcy petition. This would lead to his debt being set aside enabling supplier to collect his debt outside the bankruptcy case.

Chapter 11 Bankruptcy

In the case of a chapter 11 bankruptcy, suppliers are not adversely affected. Chapter 11 bankruptcy allows for adoption of a new strategy that would satisfy all debts as well as allow business to continue its operations. Maintaining your business would require supplies, services and products from suppliers. You have to ensure that accounts of your suppliers are satisfied and they are willing to work with you through this bankruptcy ordeal.

The reorganization plan, which is a part and parcel of chapter 11 bankruptcies have to be approved by suppliers during the approval process. The supplier can suggest and propose recommendations with regard to reorganization to the bankruptcy trustee in the case. Good relations with your suppliers during good days will pay dividends during the hard times such as a bankruptcy.

Contact an experienced Macon GA bankruptcy attorney if you need debt relief assistance or want to file bankruptcy.