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Financial Insolvency Services
Financial Insolvency Services in Chicago
Managing through the process of insolvency can be extremely challenging for any business, regardless of its size. The professionals at SOGID™ Management Consultants have decades of experience helping companies through the often-unchartered path of insolvency. We are here to help our clients assess all available options
Insolvency vs Bankruptcy
Cash flow insolvency arises when a business is unable to meet its financial obligations promptly due to insufficient funds. Accounting insolvency occurs when a company’s assets are less than its liabilities.
Insolvency
Cash flow insolvency arises when a business is unable to meet its financial obligations promptly due to insufficient funds. Accounting insolvency occurs when a company’s assets are less than its liabilities.Bankruptcy
Bankruptcy is a legal proceeding through the court system, designed to provide relief for companies that cannot meet their debts and other financial obligations. Businesses have several bankruptcy options available to them.Chapter 7 Bankruptcy
When it is apparent that a company can no longer move past its financial struggles, filing Chapter 7 bankruptcy can be an effective method to wind down business operations.
When an organization files for Chapter 7, upon court approval, the company’s assets (if any) will be liquidated. Depending on whether a business is established as a corporation, LLC or sole proprietorship, a Chapter 7 bankruptcy will have benefits and disadvantages for both owners and companies.
Partnering with an experienced insolvency consulting firm can make the bankruptcy decision making process much more efficient.
Chapter 11 Bankruptcy
Another bankruptcy option for businesses is Chapter 11. Unlike a Chapter 7, this form of bankruptcy allows a company to restructure its financial obligations through a reorganization strategy.
This process is also subject to court approval. By lowering debt obligations and establishing revised creditor payment agreements, a Chapter 11 can helpful towards keeping a business operational as it tries to get back to profitability.
Chapter 11 laws also allow businesses to sell some of their assets, and use those funds to pay creditors.
Alternatives to Bankruptcy & Restructuring Options
Sometimes companies can get legal relief with regard to insolvency without having to formally declare bankruptcy. Let’s look at two options.Assignment for The Benefit of Creditors
An Assignment for the Benefit of Creditors (ABC), involves a financially troubled company transferring legal title of its assets and property to an authorized third party, who then sells them to pay creditors. The assignee has the option of continuing to operate the business, should they decide to do so. This strategy often can increase the value of the company’s assets. This arrangement can be beneficial for distressed companies by allowing them to choose their assignee, with minimal court involvement, and offering a faster and more cost-effective liquidation process compared to alternatives.Receivership
A receivership is an insolvency tool whereby a business is placed into the hands of another entity who is given custodial control of the company’s property and assets. In many cases, a receiver is put in place to protect the interests of a senior creditor when an organization cannot fulfill its debt obligations. The duties of a receiver can include:- Continuing to operate a company with the goal of optimizing the value of its assets
- Controlling cash flow, and selling the company to a third party
- Closing portions of the business that are deemed unprofitable
Experienced Insolvency Consultants in Chicagoland Area
As a company approaches insolvency, it becomes a highly stressful time for all stakeholders. Because every business has its own unique set of circumstances, it is vital that the right financial strategy be executed. Before any insolvency remedies are pursued, let the highly knowledgeable partners at SOGID Management Consultants help you evaluate your specific situation. We have three decades of experience in helping our clients consolidate debts, liquidate financially burdensome assets, and negotiate with creditors. If you would like to learn more about our insolvency strategy services, please contact us today.
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