Even the most successful and efficient of businesses can occasionally face financial issues. Sometimes these challenges are the result of the overall economy, while in other cases, the problems may be more specific to the individual company. One of the most critical steps that many savvy business owners take during these trying times is determining the most adequate debt relief option for their unique circumstances.
As a business owner, your primary goal when facing these challenges is most likely keeping your doors open and remaining as close to fully operational as possible. This is where filing for Chapter 11 bankruptcy could potentially prove invaluable. There are many possible benefits to your company from this form of bankruptcy, including the following and more:
- Your creditors will no longer be able to contact and harass you.
- There will be no more danger of the repossession of certain company equipment, such as vehicles.
- Your company can continue to produce cash flow that can help ease your debt burden.
What’s more, if you own a business with less than approximately $2.7 million in debt, you may be able to expedite the process while also gaining greater flexibility in your negotiations by means of the subchapter V Chapter 11 bankruptcy option.
What happens after you file Chapter 11 bankruptcy?
In the immediate aftermath of filing for Chapter 11 bankruptcy with the court, you will have the option to create and propose a reorganization plan for your business with the goal of reducing your debt and obligations. Potential specifics within your proposed plan could include the following and more:
- Renegotiating existing debts
- Downsizing certain business streams
- Liquidating some or all of your company’s assets
No matter the exact intricacies of your plan, it must still be in your creditors’ best interests. You also retain the right not to propose a reorganizational plan, which can allow your creditors to propose a plan of their own for your company.
The impact on your business operations during this time
During the Chapter 11 bankruptcy process, you will now need the court’s permission before making certain company-specific decisions. These can include selling any company assets besides inventory, shutting down or expanding certain business streams, formally initiating or ending any rental agreements, and more. You also will now need to seek approval before becoming contractually obligated to any vendors or unions.
While Chapter 11 bankruptcy could provide you with a strong option toward ultimately giving your company a fresh financial start, there are most likely other debt relief options available to you as well. An experienced bankruptcy attorney can thoroughly evaluate the specifics of your unique situation, allowing you to make the best possible decisions for your company’s long-term future.