BANKRUPT FIRMS.doc
Advantages of a Bankruptcy acquisition:
An established price - which may be negotiated.
(2) If the accounting system is based upon cash vs. accrual then most of the payments would be written off 100% as expenses vs. depreciation, interest principal (check with your accountant).
(3) A Bankruptcy Judge can hold creditors @ bay, allowing a period of time for re-organization.
Buy the stock of the corporation, stock that will have no undisclosed liabilities because, if creditors are not disclosed, they can go after the original shareholders of a corporation on a personal basis.
Be certain to hire a bankruptcy attorney to represent your interests in any acquisition.
Do you want to purchase a bankrupt business? Visit your regional U.S. Bankruptcy Court (Clerk's Office) for a listing of current bankrupt businesses. These are posted daily in a log journal, or you can research filings via their computer system. Just remember that there is nothing wrong with purchasing a business that has problems as long as you recognize these problems and have the ability to resolve them, i.e., "turn the business around." Personally, I would much rather purchase businesses out of a bankruptcy than pay top dollar for a "cream puff," one that is owned by an unmotivated and/or unrealistic Seller.
The State of Washington has 3 U.S. Bankruptcy Courts, one each in Tacoma, Seattle and Spokane. All states have one or more U.S. Bankruptcy Court(s). In fact, many states have several.
Where do you find bankrupt businesses?
U.S. Bankruptcy Court, Clerk's Office, at stated above.
Subscribe to a local legal and/or business newspaper.
Contact via a mailing attorneys who specialize in the resolution of bankrupt clients, either Chapter 7, which is a liquidation of assets, either voluntary or involuntary, or a Chapter 11, which is a "stop the creditors" reorganization type.
Internet access to bankruptcy court information:
Attn: Business Brokers: If you have listed a business that has entered into bankruptcy, remember that your Listing Agreement is now worthless. You must have the judge approve your appointment, as the Business Broker of record or you'll spend a lot of time selling the business and not get paid for it. The creditors and their attorneys would love to screw you out of your commission. Once you are appointed the Broker of record then you'll be paid 1st as an "administrative expense," along with the attorneys; yet ahead of all the creditors.
Remember.........
Creditors would love to "wash out" the Business Broker who saved their hides.
Those magic words, "administrative expense;" that is, if you expect to be paid.
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