Is your small business struggling in this ever changing economy? Are you wondering what your options are? Do you have to liquidate your assets and close the businessAll good questions and the answer to them might just be Chapter 11 Bankruptcy.

What is Chapter 11 Bankruptcy

Chapter 11 Bankruptcy provides the debtor the ability to reorganize its debts so that it pays its creditors over an extended period of time.  Typically a corporation or partnership will file Chapter 11 bankruptcy, however, individual sole proprietors can also seek relief with a chapter 11 filing as well. The bankruptcy code states that sole-proprietors must include both business and personal assets while limited liability corporations (LLC’s), partnerships and corporations only need to include business assets.

How Can Chapter 11 Bankruptcy Help

When a small business is granted the ability to reorganize its debt, it allows the small business to catch up on its debts and repay its creditors over a period of time.

Chapter 11 bankruptcy

First of all, in a Chapter 11 bankruptcy the small business is afforded the luxury of handling its own financial affairs without the intervention of a bankruptcy trustee.  That is not to say a bankruptcy trustee will not be appointed.  Chapter 11 filers will be appointed a bankruptcy trustee but as a small business owner you will generally be allowed to maintain control of your business as that is in your company’s best interest.  This can be especially helpful because you know your business the best and know the best way to be a success in your industry.

Secondly, the re-organizational aspect of chapter 11 bankruptcy allows small businesses to pay their creditors at a later date.  In a Chapter 13 bankruptcy once your bankruptcy plan is approved your business will need to immediately begin paying their creditors.  However, in a Chapter 11 bankruptcy your business can delay payments to creditors until you are more financially able.

Lastly, a small business can be granted extended payment terms with a Chapter 11 bankruptcy.  In a Chapter 11 bankruptcy the repayment terms are much less stringent then the maximum five year repayment terms in a Chapter 13 bankruptcy.

The Chapter 11 Process

Like other chapters of bankruptcy, when you file Chapter 11 your company’s property becomes the property of the bankruptcy estate and all collection activity will be automatically stayed.  This will give you the time to breathe, explore reorganizations plans, and contemplate ideas that will allow you to save your business.  And, you will have a minimum of 120 days to propose a plan of reorganization that will allow your business to repay its creditors.  Upon receiving the plan of reorganization your bankruptcy trustee will speak with your creditors and seek their consent to the plan.  Note, your plan may be approved even without the approval of all your creditors.

Once the bankruptcy trustee has the required approvals, your bankruptcy plan will be approved and repayment terms will be put into effect.  Idealistically your business will have less debt to pay back, a plan will be in place to pay said debt back, and your business will be on the road to recovery.

Let's Solve Bankruptcy Together

Goldbach Law Group specializes in

Chapter 7, 11, and 13 Bankruptcies

Google Rating
5.0
Based on 87 reviews

Goldbach Law Group Is Proud Member Of These Organizations

OFFICE LOCATIONS