History of Bankruptcy Protection
Since 1898, large companies have been receiving bankruptcy protection. The government provides this protection to corporations going through bankruptcy so that they have the time to reorganize, keep employees and rebuild their business. Unfortunately, bankruptcy protection doesn't account for what happens to smaller businesses along the way.
Small Businesses Rarely Get Paid
More often than not, small businesses get left in the dust when the large corporations they provide products or services to file for bankruptcy. Small companies have thin cash reserves, which means a large corporation that reorganizes and doesn't pay them leaves them vulnerable. Secured creditors receive money first, meaning small businesses can wait months or even years before they get paid — if they are paid at all.
Creditors Receive Pennies on the Dollar
Even when a small business hires its own Oxnard bankruptcy lawyer to help it through the situation and manages to keep its doors open, it will usually only receive pennies on the dollar when it does receive payment. This is often because banks and other financial institutions push the company to reorganize in the first place. After all, they know they come first in the repayment queue, so they have nothing to lose.
Other Ways the Bankruptcy Hurts
It isn't just the actual act of filing for bankruptcy that causes large corporations to hurt small businesses. Many corporations give their employees retention bonuses to keep them on board through the bankruptcy process. While corporate employees are receiving thousands of dollars to stay on at a flailing company, small businesses are drowning. Even worse, current bankruptcy laws provide little protection for a small business that needs to file bankruptcy itself.
So, what can you do to combat the problem? The unfortunate answer is not much — at least not until laws change. However, an Oxnard bankruptcy lawyer like Brent George Law, can help you protect your small business as best you can in the meantime.