Cleveland Chapter 11 Bankruptcy Lawyer
In these challenging economic times, many businesses throughout Tennessee and northern Georgia face financial problems as a result of reduced sales and reduced profits, as well as tax issues. Chapter 11 bankruptcy is designed specifically with the needs of businesses and professionals in mind. Through this type of bankruptcy, you are able to reorganize your debts. In most cases, businesses can continue to operate as long as they generate enough revenue to meet the financial obligations established in the Chapter 11 reorganization plan.
Since 1974, the attorneys at the law firm of Richard Banks & Associates P.C. have been representing small businesses and professionals with their own practices, such as doctors and dentists. We also assist farmers with Chapter 12 bankruptcy.
What Business Owners Should Know About Chapter 11 Bankruptcy
Many Tennessee business owners are worried about the economy. In fact, some are currently struggling to keep their doors open due to financial problems. In the past, many business owners have been able to take advantage of a valuable financial tool known as Chapter 11 bankruptcy in order to retain control of operations while a court-approved financial reorganization plan is put into effect.
It is often difficult for the average business owner to determine a best course of action when facing a particular set of financial crisis circumstances. There are several types of bankruptcy, and a business owner might qualify for one but not another. The following list shows basic facts and differences between Chapter 11 and other types of bankruptcy:
- Chapter 11 does not require complete liquidation of assets.
- A business owner can retain control of operations during Chapter 11 proceedings (with exceptions).
- Chapter 11 may be filed by business owners or individuals, whereas Chapter 13 is restricted to individuals, only.
- Chapter 11 is the most complex form of bankruptcy.
- Chapter 11 does not require a certain amount of income while both Chapter 7 and Chapter 13 do.
The greatest benefit of filing a Chapter 11 bankruptcy is that a business owner does not have to close their business’s doors. This means that they can continue to generate revenue in order to pay off debt or perhaps buy enough time to sell.
Either a business owner or lender may propose a restructured payment plan under a Chapter 11 bankruptcy. If a business proposes the plan, its lenders will have the right to challenge the proposal if they don’t agree with it.
Most financial crises are temporary, and sometimes, being able to reorganize assets and debt payments is all that is needed to get finances back on track when things have gotten out of hand.
Who Can File For Chapter 11 Bankruptcy?
Chapter 11 isn’t just for large corporations; it’s available to small businesses, partnerships and even individuals whose debts exceed certain thresholds. Here are the entities that can file:
- Corporations: Large and small, seeking to restructure their debt while remaining in business.
- Partnerships: Partnerships can reorganize their business structure and debt.
- Individuals: Particularly those with debts too large for Chapter 13 bankruptcy limits.
Before filing, consider consulting with a bankruptcy attorney to be sure it’s the right debt relief option for you.
How To Initiate Chapter 11 Bankruptcy
Considering Chapter 11 bankruptcy? Here are the essential steps to get started:
- Consult with an attorney: Engage a bankruptcy attorney to guide you through the legal complexities.
- Prepare documentation: Gather financial documents, including lists of assets, debts, income and expenses.
- File the petition: Submit the bankruptcy petition to the court, which includes all required forms and fees.
- Notify creditors: Inform your creditors of the bankruptcy filing as required by law.
- Attend the meeting of creditors: This is when creditors can ask questions about your finances and reorganization plan.
Once you have filed the petition, the debt relief process takes effect.
What Happens When A Business Files For Chapter 11 Bankruptcy?
Here are the steps you can expect to go through in the Chapter 11 bankruptcy process:
- Automatic stay: Immediately after filing, an automatic stay halts all collection activities from creditors, which gives breathing room to focus on restructuring efforts.
- Business operations: Businesses may continue operating, but major decisions need court preapproval.
- Debt repayment plan: The business proposes a plan to restructure and pay off its debts over time.
- Creditor committees: A committee of creditors may be assembled to negotiate terms with the business.
- Plan approval: The proposed plan must gain approval from creditors and the court.
After filing, the business works closely with legal counsel to navigate these steps. The ultimate goal is to emerge in a better financial position.
Keeping The Doors Open
Businesses with overwhelming debt face a variety of dangers, including threats of foreclosure and repossession of company cars or business equipment. As soon as Chapter 11 is filed, these threats must stop. All collection actions creditors have threatened or initiated must stop. Creditor harassment must stop. All of the distractions that have taken your mind off operating your business must stop, freeing you to do what it takes to keep the doors open.
How Long Do Chapter 11 Bankruptcies Typically Last?
Chapter 11 bankruptcies can vary in length. Typically, they last from six months to two years. The duration depends on how quickly a feasible reorganization plan is developed and approved. However, complex cases might take longer to resolve. Throughout this time, staying in close communication with your legal advisers and stakeholders is crucial to effectively manage the process and aim for a successful exit from Chapter 11.
Chapter 7 Bankruptcy: Another Debt Relief Option For Businesses
If a business does not successfully reorganize under Chapter 11 and continues to face insurmountable challenges, Chapter 7 bankruptcy might be the next step. This form of bankruptcy involves liquidating the business’s assets to pay creditors. Unlike Chapter 11, which focuses on reorganization and allowing the company to continue operations, Chapter 7 is about orderly closure and ensuring creditors are paid fairly.
Representation From A Board-Certified Bankruptcy Specialist
When you choose our law firm, your case will be led by board-certified bankruptcy specialist Richard L. Banks. Considering how unique and complex Chapter 11 bankruptcy is, it is important that you have proof that your attorney has the depth of knowledge necessary to guide you through the process. Board certification is that proof.
Contact Us For A Free Initial Consultation
Call us toll-free at 866-596-8527, or send us an email to talk about debt consolidation with an experienced Cleveland Chapter 11 bankruptcy lawyer.