Boca Raton Bankruptcy Attorney

Charities and Bankruptcy

Many charities are beginning to file for bankruptcy. With the economy struggling in 2007 through 2009, it is not surprising that many charitable organizations are finding it more difficult to continue their operation. Several factors have led to an increase in the number of charities filing for bankruptcy including low donations, rising cost of operation, and not receiving government funding.

Charities going bankrupt is normally not a common occurrence, but it does happen. Normally, charities that participate in the arts are the first to be hit by a struggling economy. Charities that operate with health services or relief are normally safer in difficult times, although still need significant financial support. Charities that operate on a tight budget might find an economic downturn impossible to operate in. Charities can file for the same protections that other individuals enjoy under bankruptcy code.

The demands of many charities have forced them to operate in new and sometimes risky ways. Taking out loans are receiving large financing may be another reason for needing to file for bankruptcy.

Charities are able to file for bankruptcy under Chapter 11. Chapter 11 allows them renegotiate debts or leases, and create a plan for the organization to survive. Some charities have filed for Chapter 7 before which allows them to completely liquidate the organizations assets.

Bankruptcy is extremely important for many charities because of the sheer number of creditors. Some charities operate with extensive lists of creditors, contributors, or donors who need to be considered when bankruptcy is filed.

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If you or your company is considering filing for bankruptcy, or if you would like more information, Boca Raton bankruptcy attorney Eric Klein, P.C. can help. Contact us at 561-353-2800 today.