Business owners in Guam may face financial challenges leading to bankruptcy due to various factors. Economic downturns caused by fluctuations in the local or global economy can significantly impact a business’s revenue and financial stability. Poor financial management from inadequate budgeting, spending, or investment decisions can erode a business’s financial foundation. Even unforeseen events like natural disasters or unexpected market changes can disrupt business operations and revenue streams.
Whatever the cause for financial insolvency, business owners are wise to understand the basics of bankruptcy before moving forward.
You are not alone
Local legal experts predict that bankruptcy throughout the island will surge. Initially, they expected a jump in filings following the pandemic. When that did not happen, Chief Judge Frances Tydingco-Gatewood noted that a return to pre-pandemic activity will likely trigger bankruptcies in the near future. If you are a business owner who finds themselves considering this option, know that you are not alone.
Consider the following
Prior to initiating the bankruptcy process, business owners should consider several key factors, including:
- Eligibility requirements: Business owners must meet certain criteria to file for bankruptcy. This includes the type of business entity, the location of the business operations, and the nature of the debts incurred.
- Types of bankruptcy: Guam recognizes several bankruptcy chapters, including Chapter 7 (liquidation) and Chapter 13 (reorganization for individuals), which are also applicable to business entities under certain conditions. Each type has unique implications for the business owner’s assets and future operations.
- Legal and financial advice: It is wise to consult with an attorney who understands Guam’s specific bankruptcy laws. Business owners should also seek financial advice to evaluate all available options.
Before moving forward with bankruptcy in Guam, business owners must conduct a thorough assessment of their situation. Understanding the types of bankruptcy, eligibility, and seeking professional guidance will help to better ensure you chose the right path for your business’ financial future.