Buying a Business in Bankruptcy

Thousands of American businesses file for bankruptcy protection yearly, regardless of how much value the businesses still have. Buying a company going through the bankruptcy process can be appealing and have tremendous benefits; however, at the same time, this process can be complex, and it is best to ensure you get it done right.

Contacting a New York business bankruptcy attorney can help guide you through the process and navigate the way to finalizing your purchase. The attorneys at Ursulova Law in Brooklyn, NY, dedicatedly help our clients work through the legal process associated with buying a business in bankruptcy. Call us to learn more about the process of purchasing a distressed company or its assets.  

Risks of Buying a Distressed Business in Bankruptcy

There are risks associated with buying a distressed business in bankruptcy.

• The first risk is the transaction may face challenges from creditors and get blocked by the courts.
• The second risk is that the buyer could be stuck with the liabilities incurred by the bankrupt company.
• Another risk is that the company and assets you buy are no longer viable in today’s economy — outdated. For example, buying a company that produces 35mm film may not be the best option, especially since the invention of digital photography.
• Finally, you may lose money with this investment unless the company owns other assets.

Should I Buy a Distressed Business in Bankruptcy?

Buying a distressed business in bankruptcy can be beneficial, allowing you to buy the company, its contacts, and assets at a significantly reduced price. However, before deciding to buy a business in bankruptcy, you must do your due diligence and research everything possible about the process and the business you intend to purchase. Complete business analysis can help determine if the purchase is a valid value or if it will end with multiple liabilities and added expenses.

When determining if you should buy a distressed business in bankruptcy you must first learn why you should purchase these struggling businesses:

• One reason is it is a bargain and will help boost your existing business.
• Another reason is there is an extreme potential in the industry, and it was only in bankruptcy due to the owner’s poor management or personal circumstances.
• Finally, buying a distressed business allows you to absorb all the company’s assets, products, and property to distribute or use for your business’s benefit.

When considering buying a business in bankruptcy, it is essential to do as much homework about the business as possible. Look for any public records with financial statements, tax, or judgment liens against the distressed company. Additionally, consider if the assets you obtain from buying the business will financially benefit you and your existing business operations.

How Can an Attorney Help With Your Purchase

An attorney can help guide you through buying a business in bankruptcy and help determine if the purchase is the best option for you. Bankruptcy lawyers in Brooklyn NY, can help research and investigate the distressed business to ensure it is a crucial business worth purchasing. Additionally, the attorney can help file all necessary paperwork and help close the sale of the distressed business for sale.

If you planning to buy distressed companies for sale, the Brooklyn bankruptcy attorneys at Ursulova Law can help you every step.  We will take the time to discuss your options and help you determine if distressed businesses for sale are worth the risk and investment. Call our office today to learn more about how our attorneys can help with the research and final purchase of the distressed business.