Although it may seem as though the economy is starting to pick up, many companies still struggle with day-to-day business. Unemployment, credit card debt, divorce, college tuition and other factors can cause consumers to spend less. When this happens, businesses suffer. They lose profits and become unable to pay bills. The next step? Bankruptcy. While bankruptcy may seem like a bad word to some business owners, Chapter 11 bankruptcy - a type of bankruptcy for businesses - can actually help a struggling company stay afloat.
Chapter 11 is the only bankruptcy option for a corporation, partnership or limited liability company that wants to reorganize and stay in business. Excessive debt happens when a company has too many expenses and not enough income to pay them. When a company files for Chapter 11, the debtor creates a plan to help balance the income and expenses. The bankruptcy court must approve this reorganization plan. The plan includes cutting staff and selling assets to increase cash flow.
Chapter 11 also allows debtors to follow a modified repayment plan so they can pay off debts and loans more easily. They can lower their monthly payments and position themselves for success. When debtors are behind on payments, they may face repossession or foreclosure. However, once the bankruptcy has been filed, creditor harassment must stop. Once the debtors are free from harassment, they can focus on rebuilding the company.
If your company is struggling to pay bills, commercial bankruptcy may be the answer. Chapter 11 can help you cut costs and come up with a new plan of attack. See how an experienced bankruptcy lawyer can help you save your business and perhaps even help you come back stronger than ever.