Business Bankruptcy – The Facts on Chapter 11
Chapter 11 business bankruptcy is a legalized plan for business to declare bankruptcy but continue to work under supervision. This plan is known as a “reorganization” because the bankruptcy plan rearranges or resets your business to be more profitable and be able to repay your debts.
THE PROCESS FOR FILING CHAPTER 11 BANKRUPTCY
The Chapter 11 process starts by selecting a professional bankruptcy lawyer. He will help you determine what type of bankruptcy chapter is best for you. The attorney filing the case will file it in the same state where business is conducted.
To start a bankruptcy plan you must start by signing a petition. The petition consists of the intention to file for a plan of rearrangement. A business filing for Chapter 11 protection will be appointed a trustee that can guide you through the whole plan.
ADVANTAGES OF FILING FOR BUSINESS BANKRUPTCY
Chapter 11 business bankruptcy is a “reorganization.” It allows your business to rearrange its debts and the bank gives an automatic stay. Benefits of Chapter 11 consists of:
- The business continues to operate. And your business starts to repay its debts under the reorganization plan.
- Your creditor or loaner cannot bother you or contact you. Due to the automatic stay by the court, it will be a life saver and you can be in peace without your creditor knocking on your door or calling incessantly.
- You can re-negotiate your debts. As a part of the reorganization plan, you can attempt to revise your leases, agreements, contracts, etc.
- You can get a fresh start. With this extra time, you can repay some debts and contracts. As you do this your business will get a second chance to regain its footing.
DISADVANTAGES OF FILING FOR BUSINESS BANKRUPTCY
While Chapter 11 has many of benefits, it has several drawbacks that need to be considered, for example, the process of filing for bankruptcy can be both time-consuming and costly. Because of this, many small businesses tend to think very carefully about whether they should opt for business bankruptcy or not.