Many businesses struggle with debt, including those established in Michigan. A quick rinse might be the best option to get through the process. Business owners should know what a quick rinse is and how it relates to bankruptcy.
What is a quick rinse?
A quick rinse is a type of Michigan bankruptcy that a company can file if it has a problem with debt. It allows the bankruptcy case to take place faster than usual. Specifically, a quick rinse is available when a business owner is filing for Chapter 11 bankruptcy to reorganize their company’s finances and debts.
When did the quick rinse originate?
The quick rinse option of Chapter 11 bankruptcy first came out in 2008 during the economic crisis. Two well-known companies relied on quick rinse bankruptcy to bounce back from massive debt, General Motors and Chrysler. Both companies have managed to go on strongly.
How does a quick rinse work?
A quick rinse in bankruptcy in Michigan and elsewhere works when the debtor is able to successfully negotiate a settlement with their creditors. This agreement must take place before the case goes to the bankruptcy court. While normal Chapter 11 bankruptcy cases can take several years, a quick rinse allows the process to go through immediately. It also gives the company the opportunity to retain its staff instead of laying off employees and losing customers.
The reason why quick rinse bankruptcy works so quickly is that things are settled with the business’ creditors beforehand. Instead of struggling for years, the company can continue to operate. Company debt is quickly reorganized in a way that allows that debt to be more easily settled and paid back to creditors. A quick rinse might be the best option for businesses to alleviate their debt and stay afloat.