Stockholders and Corporate Bankruptcy
Just like many individuals may face financial struggles through the course of their lives, companies and businesses are also subject to financial success and failure. If a business fails to meet the expectations of its financial plans or if it can no longer make regular payments to its creditors, the business owners or managers may decide to file for corporate bankruptcy.
Business owners who are struggling to make ends meet may turn to bankruptcy to reorganize the company or liquidate assets to pay creditors. If you are a business owner and are considering filing for bankruptcy, contact the Boston bankruptcy attorneys of Joshua Spirn & Associates at 1-800-975-5346.
Bankruptcy and Stockholders
If a company declares bankruptcy, the stockholders may find:
- If the court finds that the company is insolvent, the stockholders may not receive any compensation
- Secured and unsecured creditors typically have first claim on any remaining assets
- If the company owes more to its creditors than it is worth, the stock may no longer be worth anything
- If the company goes through bankruptcy but is not completely insolvent, shareholders may not receive dividends for the duration of the process
- In the event that the company reorganizes, stockholders may be asked to trade in their old shares for shares of the reorganized company
If a company is declared insolvent, the shareholders may be able to report the worthless stock as lost income on their tax returns. Before taking any action it is important to consult legal and financial professionals if you are a business owner or shareholder.
Contact Us
If your company is facing a dire financial situation and you are considering filing for commercial bankruptcy, contact the Boston bankruptcy attorneys of Joshua Spirn & Associates at 1-800-975-5346 today.
