Opening a business comes with its fair share of risks. Sometimes, businesses face a combination of hardship and uncertainty that leads them to close their doors for good. Investing a ton of money into a business can lead to extensive debt and financial burden for the owners. That’s why the option to file for Chapter 11 Bankruptcy exists. It isn’t the right solution for every business, but it can certainly provide opportunities for struggling businesses to restructure themselves financially so that they can move forward. It’s also best to speak with a business attorney prior to filing for Chapter 11 bankruptcy. Below, we will discuss chapter 11 bankruptcy and discuss some of its benefits for struggling businesses.
Chapter 11 bankruptcy is an option that is typically available to larger corporations. It’s also known as a debt reorganization since the company is restructuring its internal finances. The big benefit of filing for Chapter 11 is that the business can keep running and making profits while they focus on paying off all of their debts. Debtors are also allowed to partially repay unsecured debts, which can be a big help for struggling businesses. Businesses receive an automatic stay when the file for Chapter 11 that basically prevents creditors from recollecting their debts from the company.
The main goal for a business when they file for Chapter 11 bankruptcy is to come up with a reorganized plan for staying profitable while focusing on paying off all of their debts. The business will have to come up with a legal plan that specifically details each of their debts and how they will be paid off. The plan will be confirmed by a court of law, which means it’s important to have a top-notch legal time by your side when you are creating a reorganization plan. You can always reach out to Derryberry & Associates LLP if you are seeking legal advice for your business or need help with Chapter 11 proceedings.
There are some downsides to filing for Chapter 11 bankruptcy that should be noted. It can be very expensive to file for Chapter 11 due to legal fees and the length of time it takes to handle the process. If you are looking for an affordable team of experts, you can always reach out to Derryberry & Associates LLP. It’s also important to note that a Chapter 11 bankruptcy can require a lot of effort. That means you and your team will have to take time out of your regular schedules to come up with a plan for paying debtors and more.
We hope this article has provided you with some great insight into how Chapter 11 bankruptcy works. If your business is struggling, it can be a good option for getting things back on track. Remember that Chapter 11 bankruptcy isn’t for everyone, so talk with your business lawyers prior to making any final decisions.