Inability or impairment of a business or its underlying assets can force some companies into any of the various forms of bankruptcy. Knowing both bankruptcy and liquidation value of your corporate assets is essential to navigating the process with the least amount of pain possible and is critical to the overall restructuring and reestablishment of the business as a going concern. Most corporate bankruptcies fit within Chapter 7 and Chapter 11 as outlined below.
Chapter 7– In this form of bankruptcy assets are typically liquidated for cash and the court supervises a trustee takeover of specific assets. This liquidation form of bankruptcy required valuation of the underlying fair market value of the assets and will often require an analysis of whether a reorganization would prove the best method for maintaining the most amount of value out of a dying enterprise.
Chapter 11– When filing for Chapter 11 companies typically are looking to reorganize and restructure assets so as to keep the business viable long-term. Operations are intended to continue forward and the business is generally saved. Valuations are absolutely necessary in this circumstance as they can help determine whether a liquidation or reorganization would best suit all parties involved.
Out-of-court options can also keep such proceedings less expensive by avoiding the costly proposition of attorney fees. Third party disclosures and valuations are especially necessary here so settlement can be amicably reached.
We are not a legal firm and do not offer legal advice. We work with partner firms to help provide expert legal assistance, but nothing on this site should be considered as expert legal advice.