How to Protect Your Assets from Business Bankruptcy

If your business is faced with bankruptcy, there are various steps you can take to ensure your assets are protected. In particular, there are four steps you must take to protect your assets from business bankruptcy.

1. Choose a Reputable Attorney

If your company is faced with bankruptcy, it is important that you choose an attorney that is well versed in the matter. You also want an attorney that has a solid record of handling these matters for other clients. According to FOX Business, there are certain qualities you should seek out in a bankruptcy attorney. Your attorney should be open to alternate resolutions, passionate about your case, and empathetic toward your needs. You should also take into account their fees, and you should not choose an attorney just because they have the lowest fees.

Your attorney will be able to help determine which type of bankruptcy you must file. Bankruptcy is not a simple process. A talented and trusted attorney will be able to help you navigate the process, and he or she will be able to help you mitigate the impact this will have on you and your business. Be sure that you choose an attorney that has insight on how to save as much of your assets as possible and be sure they are committed to doing so.

2. Pay Attention to All Legal Requirements

Your attorney will require you to abide by certain procedures that relate to your case. These are legal requirements set up by the government that you must follow. Failure to follow these requirements can prolong your case.

Failure to follow legal obligations and the instructions of your attorney can also get you into legal trouble. Your attorney will be present a timeline of what has to happen before your trial date, what will happen at your hearing, and what you are required to do after your court date. You must follow these guidelines, and there is no way around that. Your assets can come under more scrutiny if you do not pay attention to all of the legal requirements. You can end up losing more money in legal fees and fines, and assets can be taken.

3. Pay Attention to Organization and Details

While your company prepares for bankruptcy organization and attention to detail are very important. You will be required to compile a list of all debts you owe and make that available to your lawyer. You need to make sure that all debts are accounted for, and your attorney should check your list with you on several occasions leading up to your filing and court date. You do not want to miss the opportunity to get as much of your debt cleared as possible.

All of your financial assets will have to be reported and recorded, too. Do not leave any of this information out. If you withhold certain financial information, you can be penalized and face other legal issues. You will also have various dates and deadlines to remember. Proper organization on your end will make sure that all details are covered. It will also make certain that as little damage as possible occurs with your assets.

4. Create a Special Purpose Vehicle

You also can consider establishing a special purpose vehicle (SPV). An SPV can be set up as a separate entity for you. This entity can house various assets that you do not want to be impacted by your bankruptcy. And while the SPV belongs to you and anyone that takes ownership of it with you, it is a separate business from the one you are involving in a bankruptcy.

While it is wise to look into an SPV when you first launch a company, or once you have sizeable assets, you can still establish an SPV even after deciding to file for business bankruptcy. Your attorney should be able to point you in the direction of how to set up your SPV with the right person(s) experienced in the matter. Any business bankruptcy attorney should be knowledgeable about SPVs and how they work. Consider this option with the attorney representing you and your business.

Be Sure to Follow These Four Steps

The aforementioned steps are proven ways to help protect your assets from business bankruptcy. While there are other steps you can take, these four steps will help you mitigate losing more than you have to lose. Business bankruptcy can be a fresh start, but you have to make sure you maximize the opportunity.