Standing Tall When It Matters Most

The purpose of a quick-rinse bankruptcy

A large company ensures its success by preventing financial disasters and handling business affairs as quickly as possible. In Texas, a quick-rinse bankruptcy is an expedited form that takes only days or weeks to complete. There are a few qualities that make this process more unique than a normal Chapter 11 Bankruptcy filing.

Legal definition

A quick-rinse bankruptcy is the expedited version of a standard Chapter 11 bankruptcy filing. Before the petition is filed, the debtor reorganizes his or her assets and negotiates deals with creditors. The bankruptcy court uses these deals with creditors to complete the process in a few days.

A corporation often opts for a speedy bankruptcy to prevent standard legal proceedings from continuing for months or years. The claimant avoids having to deal with complicated business negotiations and legal procedures.

The purpose of a Chapter 11 bankruptcy

Chapter 11 bankruptcy is filed when a company cannot secure a loan to pay off its debts. A quick-rinse bankruptcy is the fastest, most streamlined version that allows the company to continue its business operations. However, the debtor may only be able to provide half of the amounts owed to creditors. Many creditors accept the reduced offers instead of waiting for the results in court.

Most corporations have complex dealings that could take years to settle in a regular bankruptcy case. A quick-rinse bankruptcy allows the business owners, managers and shareholders to expedite the process to a few days or weeks. The debtor negotiates deals with the creditors before filing a petition. During the process, the company remains in service without having to delay or reduce its activities.