Although frightening and under difficult circumstances, bankruptcy doesn’t have to be the end. With the right bankruptcy lawyer, it can even be an advantageous boon to your business. A Chapter 11 bankruptcy is not a death, it’s an opportunity for reorganization and to take a new look at how your business is being run. You may not be able to think clearly with the pressures facing you right now, but a little time to breathe can make a big difference. A debt load brings with it many debilitating pressures. Lawsuits, collections demands, defaults and taxes can make it very difficult to cope alone and make the right decisions. Don’t try to do it alone. Get a lawyer who knows how all of this works. Chapter 11 is layered, even multi-faceted and therefore it is one of the most complex legal areas. With a chapter 11 bankruptcy, the company can maintain control over the assets of the business while negotiating their debt load.
If your business is suffering under the overwhelming pressures of debt, a Chapter 11 business bankruptcy can turn it around. The best part of this type of bankruptcy is that it gives you space to catch up, and with the help of your bankruptcy lawyer you will have the time and space to decide the best way to proceed. A Chapter 7 bankruptcy, on the other hand, does liquidate the assets of your business to pay your creditors. In the case of Chapter 7, the business will be lost and the creditors will likely not end up with all the money owed to them, but full payment is often made under Chapter 11, so it’s a win-win for everyone.
Choose to file for bankruptcy under Chapter 11 if your business is still a money-making venture. That is, if the long-term revenue that the company will generate is more than the value of the current debt, that business will likely continue to be a success given time and a good break. A bankruptcy lawyer can assist the business owners in making this decision and successfully following it through. A Chapter 11 bankruptcy may become a Chapter 7, if the conditions of the Chapter 11 agreement are not being met.
To begin the process, the business owners need to sit down with the bankruptcy lawyer and make a list of the business assets and the debts from which it is seeking protection. Only the debts on the list will be able to be included in the bankruptcy agreement. Creditor protections provided under the United States Bankruptcy Code, allow the creditors the right to object or question these proceedings, and even vote to accept the repayment plan. Once the matter is settled to this point, the information will be reviewed, approved and, if accepted, supervised by the Office of the United States Trustee. It is their job to make sure that fraud or mismanagement has not occurred to put the debtor in this position.
Under Chapter 11, the debtor retains control of his assets, and now needs to begin to reorganize the debts in the best way possible. Cutting staff, closing some branches, and giving stock options instead of money to the creditors are some ways that a bankruptcy lawyer may advise to save money. During the period when the Chapter 11 is in effect, the debtor may reject or renegotiate existing contracts in order to improve their position, but they may not enter into any other major business decisions without approval. They may not sell or buy property, or merge with other companies.
After bankruptcy, many businesses go on to be successful. A bankruptcy lawyer can often serve as a business coach to help the business understand how and why they were forced to file for bankruptcy, thereby helping them become a success. The success of the future business is dependent on the successful outcome of the bankruptcy and the turnaround in the way everything was managed. An unsuccessful Chapter 11 bankruptcy may become a Chapter 7 if it is mismanaged. It is important to determine the cause of the bankruptcy and the business’s role in putting the business in that situation so that the mistakes are not resumed after and during the time of the bankruptcy protection.
Speak Your Mind