How to Prevent Corporate Bankruptcy</h1> <article> <h1>How to Prevent Corporate Bankruptcy</h1> <p>MySolutionSpot Editor — Sat, 12 Jul 2008 03:39:20 GMT</p> <p class="articletext"><span style="font-family:Arial;">As a business owner or someone thinking of starting a business, you're probably aware that the "deck's stacked against you" in your race for survival. <br /> <br /> Before we talk about preventing corporate bankruptcy, I'd like to share some facts and statistics that you may or may not be aware of. These statistics are shocking, but what's more important are all the real people (just like you) that lose their companies or their jobs: due to lack of sufficient corporate credit, better corporate credit terms, and open-end corporate lines of credit.<br /> <br /> Obviously, small businesses are critical to the overall support of the American economy. But, most people don't realize just how important small businesses are to every region of the United States. The United States Small Business Administration (also known as the SBA) keeps records and statistics on small business in the United States and some of their findings are surprising.<br /> <br /> 19% of all businesses fail within their first year, almost 35% fail within 2 years, more than 51% fail by the end of year three, and approximately 67% fail after four years. Access to capital, owner's education levels, an established business plan, and the usage of professional accountants appear to be the most likely reasons for business failures today.<br /> <br /> First, the typical picture of the local mom and pop country grocery store, beauty salon, barber, gas station, and more: is not the entire picture.<br /> <br /> By definition, the SBA defines an independently-owned business with less than 500 employees as a small business. More than 23 million businesses in the United States meet this classification. These businesses represent a major source of employment within small communities, throughout the US.<br /> <br /> In fact, these small businesses account for more than 99.6% of all the employers in the country and also employ more than half of all non-government jobs. From 1996 through 2006, small businesses have accounted for more than 73% of all new jobs.<br /> <br /> Retail and service-related businesses comprise more than 43% of new job openings each year, although small businesses are rapidly making gains in the technology sector too. More than 40% of engineers, scientists and computer programmers are employed by small businesses. And, oddly enough, small businesses produce 1383% more patents than larger companies.<br /> <br /> Now, let's talk about the #1 reason for business failures (as cited by small business owners) which is money. Access to financing, the lack of available financial assistance, not understanding how to properly utilize credit, waiting too late before applying for credit are just a few of the examples that force businesses to fail... which is bad for the economy. <br /> <br /> Because when businesses fail, we all lose.<br /> <br /> More than 98% of all small business owners said they've used personal credit cards to fund the operation or startup of their businesses, and more than 68% said they still use their personal credit when necessary.<br /> <br /> Worse still, is that 82% of all small business owners were unaware of financing options other than their local banks, grants (for the few that could qualify), and use of personal debt.<br /> <br /> Lucky for you... there is a better way! <br /> <br /> Simply be proactive. Seek out business credit offers every step of the way, and if you're uncertain where to turn. However, if you don't understand how to setup, structure and maintain your corporate credit file (which doesn't operate exactly like your personal credit scores)... you could be facing an uphill battle.<br /> <br /> Your personal banker, mortgage professional, financial planner and CPA will not be able to point you in the direction. And, trust me... Ive learned by failing myself.<br /> <br /> You need to find a corporate credit expert that can provide you with a corporate identity (unless you already have one), that will help you register your business with Dun & Bradstreet (establishing a corporate credit history), and that can help you achieve lines of credit equal to $250,000-$1,000,000 in 60-90 days.<br /> <br /> I found a person like this, and it's changed my life forever. Stop looking for "angels" or lottery winnings to dig you out of your messes, and get in touch with a corporate credit expert... today.</span></p> <p class="MsoNormal"><b><span style="font-family:Arial;"><br /> About the Author:</span></b></p> <p class="MsoNormal"><span style="font-family:Arial;">Lee Kendrick has been featured in numerous magazines as a highly respected credit expert, finance professional, internet marketer, software developer, public speaker, aspiring author & all-around nice guy. Lee recommends <a href="http://www.effortlessonlinemarketing.com/app/?af=647241" target="_blank">Trent Lee's Corporate Credit Builder</a> program... regardless of your personal credit rating. Also, <a href="http://leekendrick.net/corporate-credit-concepts.htm" target="_blank">click here to register for Lee Kendrick's newsletter & blog</a>.</span></p> <p class="MsoNormal"><span style="font-family:Arial;"><b>How To Prevent Corporate Bankruptcy</b><br /> <a href="http://www.reprint-content.com/">Article Distribution</a> and <a href="http://www.reprint-content.com/">Free Web Content</a> by www.reprint-content.com</span></p> </article> <article> <h1>Understanding Bankruptcy</h1> <p>MySolutionSpot Editor — Sat, 12 Jul 2008 03:39:20 GMT</p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-family:Arial;">Many companies considering bankruptcy will consult with a management corp so that they can get the best information possible. A management corp will help ease them through the transition of it. Here is some information about corporate bankruptcy.</span><strong style="mso-bidi-font-weight:normal;"><span style="font-family:Arial;"> </span></strong></p> <p> <strong style="mso-bidi-font-weight:normal;"><span style="font-family:Arial;">Chapter 7 Bankruptcy</span></strong><span style="font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-family:Arial;">Chapter 7 of the corporate bankruptcy code says that all of the business operations must stop and the company goes out of business. A trustee is placed in charge of selling off all of the business assets. The proceeds from the sale of the assets is then used to pay off the creditors.</span><span style="font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-family:Arial;"></span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-family:Arial;">The investors who took the least amount of risk in the company by purchasing bonds get paid first. This is because of the risk-return trade off. This means that the investors who bought corporate bonds do not see as much profit from the company, but they have the most protection against losing their money. Those who are equity holders, however, have the potential to make more money by sharing in the companies growth. These investors stand to lose the most though, and are paid last if the company files bankruptcy.</span><span style="font-family:Arial;"> </span></p> <p><strong style="mso-bidi-font-weight:normal;"><span style="font-family:Arial;">Chapter 11 Bankruptcy</span></strong><span style="font-family:Arial;"> </span></p> <p><span style="font-family:Arial;">Much like consumer Chapter 13 bankruptcy, the corporate Chapter 11 bankruptcy does not forgive all of the companies debts. Instead, it allows them to restructure and repay their debts over a reasonable period of time. Companies that consider filing chapter 11 bankruptcy expect to be able to resume normal operations and eventually try to get out from under it. They prefer this option since they would still be in business and be able to keep their company. They simply have some debt that has gotten out of control and they need a plan to help them get back on track.</span><span style="font-family:Arial;"> </span></p> <p><span style="font-family:Arial;">Chapter 11 bankruptcy is by far the most expensive corporate option. The reason many companies choose it is because it allows them to retain control of their business and oversee the bankruptcy process. When a company files chapter 11 they are assigned a committee to go over all of their debt and holdings. Some shareholders may be able to offer their input, but the decisions are ultimately up to the committee to make. First priority is given to the creditors, since the money in question is owed to them.</span><span style="font-family:Arial;"> </span></p> <p><span style="font-family:Arial;">In some cases the committee cannot agree on a reasonable plan that will be given the go ahead by the courts. In these instances, business owners or shareholders may end up seeing their assets being sold to satisfy their debts anyway.</span><span style="font-family:Arial;"> </span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><strong style="mso-bidi-font-weight:normal;"><span style="font-family:Arial;">Conclusion</span></strong><span style="font-family:Arial;"> </span></p> <p><span style="font-family:Arial;">A chapter 7 bankruptcy means the end of the company. They are no longer in business and their investors will largely lose the money they put into the company. A chapter 11 bankruptcy allows a company that is in dire financial straits to regroup and reorganize. They are given an opportunity to repay their debts and try to become a functioning and profitable company once again. Neither bankruptcy choice is ideal, but at times it is the only option.</span><span style="font-family:Arial;"> </span></p> <p><span style="font-family:Arial;">Find the latest information on bankruptcy visit <a target="_blank" href="http://bankruptcymanagementcorp.net/">Bankruptcy Management </a>as well as <a target="_blank" href="http://bankruptcymanagementcorp.net/Avoid_Bankruptcy.html">Avoid Bankruptcy</a></span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-family:Arial;"> </span><span style="font-family:Arial;">Article Source: http://EzineArticles.com/?expert=David_Swanson</span></p> <p style="margin:0in 0in 0pt;" class="MsoNormal" style="><span style="font-family:Arial;"> </span></p> </article> </main></body></html>