Business Valuation for Bankruptcy, Insolvency & Liquidation

There are essentially three types of bankruptcy small businesses face: Chapter 7, 11 and 12. Chapter 11 is a petition to reorganize debts while maintain on-going operations. Chapter 12 deals specifically with farms and fisheries. Here, we are primarily concerned with Chapter 7, the kind that involves insolvency where there is insufficient income generated by the business to cover its operational expenses.

In Chapter 7 bankruptcy, the court is petitioned which, if granted, leads to the appointment of a trustee. The trustee oversees the discontinuation of operations, and the liquidation of assets where the outstanding claims are settled in order of their priority by proceeds of the assets’ liquidation.

An experienced business and equipment appraiser is often required to provide opinions of value regarding the enterprise as a whole, its current assets (including accounts receivable and inventory), fixed assets, and other assets on the balance sheet. The appraiser can also provide analysis of cash flows and other issues deemed necessary by counsel or the court.

Business and equipment appraisers work with legal counsel to relay an understanding of the differences between Fair Market Values, Fair Market Values In Place, Orderly Liquidation Values and Orderly Liquidation Values in Place. How the orderly liquidation process works in practice is discussed along with an estimate of what the proceeds from sale are likely to be and how long the process will take.

If Chapter 11 debt reorganization is a consideration, the appraiser can provide a valuation of business enterprise on a going concern premise under actual or hypothetical conditions.

Pro Business Valuations offers the full range bankruptcy business and equipment appraisal services.