Free Enterprise - The FindLaw Small Business Law Blog

Analysts Predicting Sears Bankruptcy

Despite most retailers still enjoying the revenues from the holiday shopping season, a former leader of department stores, Sears, is having a grim start to the year. In fact, analysts are predicting that Sears will be forced to declare bankruptcy within the next two years if something doesn't drastically change. CEO and billionaire Eddie Lampert is basically extending a line of credit to keep the retailer afloat.

While declaring bankruptcy for Sears may not be the end for the retailer, it is certainly looking like the likeliest path to continue existing at all. The retailer has been selling off assets, iconic properties, and even their exclusive brands. It's no secret that traditional brick and mortar retailers have been struggling since online shopping became normalized. However, many people have been fearing the fall of the Sears empire and what that means.

Business Bankruptcy

Business bankruptcy does not have to be the end of a business. In many situations, by declaring bankruptcy, a business will be able to reorganize, renegotiate debts, and continue to operate, and potentially even flourish. Conversely, if a business is closing, or is so far under water that recovery is impossible, bankruptcy may be the only way to get out from under the existing creditors.

Businesses that are struggling financially may want to explore their bankruptcy options early on, as doing so may help them discover a path to regain their financial health. Generally, businesses that declare bankruptcy will either liquidate all their assets and close in an attempt to satisfy creditors, or they will reorganize their assets and incomes in order to restructure their debts to be manageable.

Small Business Bankruptcy

When it comes to bankruptcy for small business, consideration needs to be given to the type of business organization or structure that has been elected. If the small business is a sole proprietorship, you will be personally exposed to your business's debts. That means that your home and other personal assets can be reached in the business's bankruptcy by your creditors. However, organizing your business into a formal corporation can protect a business owner's personal assets.

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