When individuals are struggling with finances, one of the options they have to protect themselves against creditors is filing for personal bankruptcy. But what happens when a Los Angeles company is facing cash flow problems and can no longer generate a profit? They may also be able to avail the protection offered by bankruptcy, but in a different way.
Similar to personal bankruptcy, when a commercial bankruptcy petition is filed all creditors must cease making financial demands and follow the automatic stay granted to the business. The business must submit financial statements outlining their assets, liabilities, income, and expenses. Also, the statement must include a description of the company's financial affairs and contracts. Under which chapter business owners file for bankruptcy depends on the type of a business.