Bankruptcy options are not just for struggling consumers but extend to struggling businesses as well. Bankruptcy protections can help individuals and businesses that need help with overwhelming debt and to get back on their feet again.
Though bankruptcy options are available to consumers and businesses, Chapter 11 bankruptcy is a specific option for struggling businesses that are encumbered by debt but are seeking to remain in business and return to profitability. Chapter 11 bankruptcy is a reorganization bankruptcy option that allows a struggling business to reorganize its debts and remain in business. The process includes development of a repayment plan the business must follow.
Generally, management of the company can remain in charge during the Chapter 11 bankruptcy process as the struggling business works on the reorganization plan with the bankruptcy court. Chapter 11 bankruptcy provides a path for a struggling business to be able to renegotiate some of its obligations and seek outside sources of capital. Similarly to a personal organization bankruptcy for a struggling consumer, it also allows the repayment of debts over time and invokes an automatic stay which keeps creditors at bay while the business bankruptcy is in process.
Filing for bankruptcy can provide the necessary breathing room struggling business owners need and also at the same time provide some relief from the stress of overwhelming debt and creditors. As a result, businesses, and anyone struggling with overwhelming debt, should be familiar with the bankruptcy options available to hep them with the financial struggles they face.