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Company Formations – From Inception to Bankruptcy, an Attorney Should Be By Your Side

Company Formations – From Inception to Bankruptcy, an Attorney Should Be By Your Side

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Business law encompasses all areas of running a business internationally and domestically. Company formations involve finances and agreements from partners or shareholders and the possible need to file bankruptcy. No matter what the situation business law attorneys offer expert legal guidance, filing and processing the right paperwork you need. Below are some more examples of situations and legal definitions that it may take an expert to interpret accurately.

Various types of company formations are:

  • (LTD) Limited:  Private Company with shareholders with limited liability whose shares cannot be offered to public.
  • (LLC/WLL) Limited Liability Corporation/With Limited Liability: Prevents a person from personal liability.
  • (INC) Incorporated: Stockholders, directors and officers are not directly responsible for the company debts and obligations.
  • (SP) Sole Proprietorship: Owner is responsible for all the liabilities of a business such as loans, accounts payable, and legal judgments
  • (GP) General Partnership: Partners are and jointly responsible for all the liabilities of a business such as loans, accounts payable, and legal judgments.
  • (LP) Limited Partnership:  Limited partner are “limited” in potential loss, since all he/she can lose is his/her investment. The general partners alone are subject to claims, debts in bankruptcy and lawsuits against the partnership.

company formationIf a business has more debts than assets, a business owner can file for liquidation or rehabilitation bankruptcy. Bankruptcy court handles the variety of different bankruptcy types. When a person or company files for bankruptcy, they go through a court supervised process of either liquidation or rehabilitation. They receive some financial relief from the courts and create a new payment plan to reimburse all their creditors using either future earnings or simply selling assets and distributing the cash.

Various types of bankruptcies under liquidation and rehabilitation are:

  • Chapter 7: This type of bankruptcy involves liquidation of all non-exempt property of the debtor to convert to cash for distribution to creditors. This usually results in the closure of the business.
  • Chapter 11/12/13: These types of bankruptcies offers rehabilitation of the debtor. With court approval the debtor works out a payment plan to creditors based on future earnings. This usually allows a company to remain open for business.
  • Estate bankruptcy: When the estate the legal and equitable interest a debtor has in property as the start of a bankruptcy case that is subject to administration.

The following are crimes related to bankruptcy situations where an owner may also need legal help with.

  • Malicious bankruptcy: When someone abuses the bankruptcy process by wrongfully petitioning to have another person or company face bankruptcy when it was unnecessary.
  • Embezzlement: When a trustee embezzles from the debtor’s bankruptcy case.
  • Fraudulent bankruptcy: When a person intentionally withholds, conceals or destroys assets and falsifies documents to defeat bankruptcy provisions.

If you are forming a company, claiming bankruptcy or are concerned with criminal bankruptcy seek a business law attorney. He or she can guide you through the overwhelming number of statutes and definitions to find the best legal strategy for your company.

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