After Filing of Business Bankruptcy
Filing a business bankruptcy is not similar in any way of filing a complaint or a lawsuit against someone else; this simply starts a legal proceeding regarding the business entity as a whole. Bankruptcy is the state of a business wherein it cannot pay off all debts and accomplish every financial obligation. In other words, the business has more liabilities than assets. This is made recognized in the eyes of the law by filing for bankruptcy.
The effect of filling for this is that first, the entity will become known as the debtor. The debtor would then ask for some relief, list his or her creditors and in what category they belong would be up to the court. The debtor can also make other requests but there is no guarantee that these will be granted. It would all depend upon the claims of the debtor, if this can be backed up by solid evidence and furthermore, if the court would agree with the side of the debtor. The requests of the debtor may or may not be granted in full or in part and it is up to the court to decide what will happen.
The main advantage after filing for business bankruptcy however is the “automatic stay”. What this means is that all creditors are prohibited from taking any action towards the debtor for any claim until the courts have decided on the case. Two ways this can be lifted; the creditor may motion for a petition to remove the automatic stay or the creditor may be given permission to the foreclosure.
