Research/Analysis 2 - Bankruptcy Essay example

1691 Words Aug 13th, 2014 7 Pages
In the year 2012, bankruptcy filings totaled 40,075 for business filings, and 1,181,016 for non-business filings. This leads to a total of 1,221,091. In regards to non-business filings, of the 1,181,016, Chapter 7 bankruptcies accounted for 816,271, Chapter 11 accounted for 1,461, and Chapter 13 accounted for 363,280. Some interesting statistics to note are that total non business bankruptcies dropped from over 1.5 million in 2010 to just over 1.35 million in 2011, and as mentioned 2012’s non business bankruptcies totaled 1,181,016. It is a good sign for the economic recovery that bankruptcy declines have occurred for 2 straight years. The declines have also been consistently dropping between all 3 chapters. Chapter 7 non-business …show more content…
Rather than signing a multi-year deal, a business may be better served to enter month-to-month contracts. Doing a thorough review of a business’ credit history should help determine if they are considered at-risk.
Also, customers who seek bankruptcy protection may be viewed as at-risk. In addition to reducing the length of contracts with at-risk customers, a business can require a deposit. For example, the attorneys at Metz, Lewis, Brodman, Must, and O’Keefe advise that if customers do not agree to 20 day payment terms, a deposit equal to the value of approximately 40-60 days of goods supplied could be required. The customer would then be invoiced for the amount needed to replenish the deposit account each month.
A third method a business can use to protect themselves from customer or client bankruptcy is purchase money security interest agreements. These agreements, once signed by financially distressed customers, give a company a security interest in all products sold to the customer, as well as proceeds from the sales of such products. Appropriate notice must be given to other secured creditor if the agreement is in fact signed (MetzLewis.com, 2008).
In the event that a business is faced with a debtor who has filed for bankruptcy, the business then needs to determine their next course of action. If the business is already attempting to collect on the balance and has…

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