Business bankruptcy is a valuable resource for struggling businesses. Just as is true of personal bankruptcy protections, there are different business bankruptcy options available to help struggling businesses depending on their situation, circumstances, needs and goals for the process.
There are a variety of challenging circumstances businesses may face that can lead to them needing to consider bankruptcy options. One option is a liquidation bankruptcy for businesses wanting to close their doors but for businesses wishing to remain open, another option may be available through Chapter 11 reorganization bankruptcy. Chapter 11 reorganization bankruptcy provides the struggling business with the option of reorganizing its debts so it can stay in business and work to become profitable again.
In most circumstances, when a struggling business files for Chapter 11 bankruptcy protection, the business can continue operating on a daily basis provided they can generate enough revenue to meet their financial obligations under the reorganization plan worked out with the bankruptcy court. If they can do that, they may be able to stay in business. The process provides additional relief through the automatic stay after the business files for bankruptcy that prevents creditor collection actions during the process. The business may also be able to seek sources of capital or renegotiate some of its obligations to help it with its debt burden.
Also true of personal bankruptcy, business bankruptcy protections may be an option to help the struggling business enjoy a brighter future down the road. In the meantime, bankruptcy protections can help the business reorganize its debts and keep the doors open.