As a business owner, you know how stressful it can get when your business is struggling to meet all of its financial obligations, especially when you’re having a hard time making payroll. A business simply can’t survive without its employees, and if you can’t take care of your employees you may lose them. Debt is one of the most difficult obstacles your business can face, and sometimes business debt becomes unmanageable. Your business needs some measure of relief so that it can continue to operate and pay its employees. Debt relief doesn’t mean giving up on all of your obligations and getting a fresh start but it does help you restructure your debt so it can be manageable, and Chapter 11 bankruptcy is designed specifically for that purpose.
What Is Chapter 11 Bankruptcy?
When a business is no longer able to meet its financial obligations, bankruptcy is an option that allows the business to discharge its debt issues by liquidating its assets and using that liquidation to pay creditors all or some of the debt that is owed. Of course, without any assets and without the credit to acquire new assets, it’s generally not possible for a business to continue to operate and its employees and creditors suffer. Chapter 11 is a form of bankruptcy that allows a company to keep some or all of its assets while its managers propose a reorganization plan that restructures the business debt, providing relief from contracts or leases that are the most troublesome and prioritizing creditors’ claims for payment of debt while keeping its doors open and business operations intact.
What Are the Benefits of Chapter 11 Bankruptcy?
As an alternative to Chapter 7 bankruptcy, which requires a business to give up all assets, chapter 11 gives the business more control over the liquidation of assets and the payment of debt by assigning creditors rights to either assets, cash payments, or extended payment streams. A Chapter 11 bankruptcy allows managers flexibility in prioritizing and working with their creditors, while creditors are subject to whatever plan is approved without having any influence on the plan other than voting rights for a minimum of six months, after which creditors can become more involved in the reorganization plan. In comparison to Chapter 7, businesses that take advantage of Chapter 11 bankruptcy services can be allowed to remain in business and are more likely to recover from the bankruptcy itself, having the advantage of protection from the courts and the cessation of collection efforts.
Who Can Help?
If you believe that your business can benefit from Chapter 11 bankruptcy services, including legal advice and legal representation in working with the bankruptcy court, contact Fred Wehrwein, P.C. for more information. Chapter 11 bankruptcy services can help you stay in business while discharging your business debts, retaining some control over those debts and your assets, and, more importantly, retaining your employees. You can also connect them on Facebook.