When a company files for bankruptcy this is publicly acknowledged, and any adult in the US can access these records for a small fee. The affects of bankruptcy are massive, which is why many companies prefer to go into receivership so they don’t upset their shareholders, but how does a business end up on the bankruptcy register?
Chapter 7 and Chapter 11
When it comes to the major types of bankruptcy, Chapter 7 and Chapter 11 bankruptcy are the two types of bankruptcy in the US which a normal business would take out.
Chapter 7 bankruptcy is known as straight bankruptcy, which means that the designated assets of the company will be sold in order to pay back the creditors of the business. This is simple and swift, and means that all creditors can get as much money as possible in the quickest time possible. However, it’s certain that the market value of the business will plummet because the company’s shareholders will attempt to sell their shares in order to cut their own losses.
Chapter 11 bankruptcy is known as corporate bankruptcy. This form of bankruptcy means that a large business can continue to run itself while directing their profits to paying off their creditors. While it still means that their shareholders will likely try and sell their shares, it won’t be a crisis as there is still a way out in the long-term because after the bankruptcy process has ended the company could be back on its feet again. Chapter 11 bankruptcy will typically last between three and five years.
The bankruptcy register is a publicly available register which any adult in America can open if they pay the fee. This will have a list of all the companies which have been put into bankruptcy. Most of the time, this information can be gained within 24 hours, depending on which method the application has been submitted by.
There are three ways which these files can be applied for and viewed.
- The first option is to visit the website of Public Access to Court Electronic Records. This is the fastest method available as all an individual has to do is register on the website and follow the website’s instructions to obtain the records. Fees are paid for via credit or debit card and cost roughly 8 cents per page.
- Records can also be obtained in person by visiting the local courthouse for bankruptcy. All an individual has to do is pay any fees in cash to the courthouse for any researching and copying which has been carried out. It should be noted that it’s also possible to search for a specific person or business.
- The final option is to visit the United States Bankruptcy Court Record Retrieval Service online. This company typically charges quite a high price for their records, but records can be received through email within hours. Records cost roughly $50 each for a full record and anything between $20 and $35 for a partial record. Payment is generally carried out through debit or credit card, and there are also postal options available.
Register or Receivership?
When a business is confronted with this terrible decision, they have a choice to make, and both could easily destroy their company. But what are the pros and cons of opting for bankruptcy, and the dreaded bankruptcy register, and receivership?
- Going into receivership means that the individual has lost control of their company to a receiver, which can be seen as a good or bad thing because it means that anything that happens is now out of the owner’s hands, but it also means that they can’t prevent liquidation or restructuring anymore.
- Voluntarily filing for bankruptcy means that the company’s creditors are unable to file for repossession of the company’s assets.
- Voluntary bankruptcy also means that the company, not the individual, is at risk of losing their assets, which means that bankruptcy proceedings can’t spill over from the owner’s business life to their personal life.
- If the type of receivership involves keeping the company afloat and directing its profits towards the creditors then it means that there’s still a future for the company in the long-term.
Overall, the decision as to whether a company opts to go on the register or opts for receivership is a tough one because opting for voluntary bankruptcy can protect the owner of the business from its creditors, but opting for receivership could still mean a future for the company in the long-run.