Chapter 11 Bankruptcy – For Corporations and High Net Worth Individuals

Under the U.S. Bankruptcy Code, there are numerous options available for businesses that are either seeking to liquidate their corporate assets or who wish to financially rehabilitate their company. Chapter 11 Bankruptcy is specifically geared towards assisting companies with reorganizing their debts and keeping their businesses open. Overall, there are a number of benefits associated with filing for Chapter 11, such as:

• It allows companies to propose their own repayment plans. The most important aspects of a Chapter 11 bankruptcy proceeding is that it enables a corporate debtor to develop a profitability plan.  To illustrate, this allows the company to outline how they intend upon reducing their costs while seeking out new sources of income once their bankruptcy action is finalized.
• It enables a corporation to remain in operation. For a corporate debtor seeking a Chapter 11 reorganization, they are allowed to remain in operation while restructuring their debt and reorganizing their finances.
• It prevents a company from losing its assets. Businesses may choose Chapter 11 bankruptcy as a way to protect assets that would otherwise be subject to liquidation and sale in order to repay creditors.  In essence, corporate debt is restructured under Chapter 11, and in some cases, corporate ownership may be transferred to creditors to satisfy the company’s debt.
• It allows corporate debtors to repay their debt over a period of time. Under Chapter 11, a debtor can spread out their debts, including taxes owed, over a period of time.  Essentially, this frees up corporate resources in order to help a company rebuild itself and better manage its finances.
• It includes all corporate debts. All debts can be discharged under Chapter 11 bankruptcy.  In other words, a business can include any and all debts in their bankruptcy action, such as tax debt, rent, equipment costs, bank loans and legal expenses.