How Much does Corporate Bankruptcy Cost?

Corporate bankruptcy can become very expensive, and the cost of corporate bankruptcy when compared with other non-bankruptcy alternatives, like a General Assignment for the Benefit of Creditors, is a disadvantage of seeking corporate bankruptcy protection. Fees vary depending on the quality of the law firm performing the corporate bankruptcy work and the complexity of the case, but many corporate bankruptcies, particularly in Chapter 11 proceedings, can easily cost 5-20% or more of the total assets of the company. This amount is likely to be a lower percentage for large corporate bankruptcies and a higher percentage for small corporate bankruptcies, due to the high fixed costs inherent in the Chapter 11 process and the complexity of the work required. Consequently, Chapter 11 bankruptcy proceedings are often less expensive relative to the total assets of the corporation for large bankruptcies than they are for smaller bankruptcies. In general, Chapter 7 corporate bankruptcies are also less expensive than Chapter 11 bankruptcies, mainly because the proceedings are often much shorter and do not involve the extended management required in operating the business of the debtor. Nova Law Group recommends that most small and mid-sized companies consider a General Assignment for the Benefit of Creditors rather than a Chapter 11 corporate bankruptcy, unless there is sufficient legal reason to file a bankruptcy case. If you would like to consult with an attorney regarding your corporate insolvency needs, a Nova Law Group attorney would be happy to assist you.

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