When a Tennessee company encounters financial trouble, a business owner can explore numerous debt relief options. Such options often include filing for Chapter 11 bankruptcy. Department store icon Neiman Marcus recently took advantage of Chapter 11 eligibility to reorganize its finances and restructure payment plans, which appears to have given the company the leverage it needed to stay afloat after years of financial crisis.
Benefits of filing Chapter 11
A Neiman Marcus spokesperson said that filing for Chapter 11 bankruptcy enabled the company to simplify its capital structure, which was beneficial in helping to overcome its financial woes. The company was also able to extend maturities and reduce interest expenses. The plan has reportedly laid the groundwork for a stronger financial future, and the company hopes that, as the market improves, it will once again rise to success.
How Chapter 11 differs from other types of bankruptcy
The main difference between Chapter 11 and Chapter 7 bankruptcy, for example, is that the latter typically includes complete liquidation of assets. The revenue generated from selling those assets is used to pay lenders. In a Chapter 11 bankruptcy, however, a debtor retains ownership of assets. Creditors agree to allow the debtor to alter the terms of a loan without having to liquidate assets.
Determining a best course of action when financial crisis hits
A Tennessee business owner undoubtedly experiences economic fluctuation with some years being more financially successful than others. If a financial crisis arises, it is sometimes possible to resolve the issue by cutting back on spending, reducing overhead costs and weeding out unnecessary expenditures. If that is not enough to get things back on track, a business owner may want to learn more about Chapter 11 bankruptcy and other debt relief programs, which can be valuable financial tools that help resolve debt without having to shut down a business.