No business owner wants to file for bankruptcy. In fact, the thought probably never even occurred when he or she was starting his business. People do not start a business unless they believe in it. Unfortunately, there comes a time for certain businesses where filing for bankruptcy is inevitable. If you believe it is time to file, here are some of the questions you may have:
What are the benefits of Chapter 11 bankruptcy?
Filing for Chapter 11 bankruptcy will allow your business to continue to operate and receive income. Debt payments are restructured over a 5-year Plan, enabling you to keep your doors open and employees on staff. Chapter 11 bankruptcy allows a business owner to stop his or her creditors from shutting the business down. Chapter 11 bankruptcy will also allow businesses to continue a line of credit, receiving monies owed to it–even insurance monies, for an open claim. By filing for Chapter 11 bankruptcy, you may be giving your company a second lease on life, turning it back into a profitable entity.
What does the Chapter 11 bankruptcy process look like?
Before filing for bankruptcy, it is important you should know that you may have other options. For example, an experienced attorney will help you decide if debt restructuring may be a better, less drastic option for you and your business. However, if Chapter 11 is your best bet, your attorney will then file a Bankruptcy Petition, which includes a list of assets, a list of liabilities, a financial statement, and a statement of any outstanding contracts or leases. Doing so will trigger an automatic stay, which will prohibit creditors and debt collectors from pursuing your debts.
After the Bankruptcy Petition is filed, there will be a meeting between you, your attorney, and the largest creditors in order to establish your business’s Reorganization Plan. Generally, this plan restructures debt, cancels burdensome contracts, and reduces overhead. The hope is that your Plan will get approved by the Bankruptcy Court and favorably voted on by the largest creditors. If the Plan is in the best interest of the business and the creditors, and it meets the legal standard of the Liquidation Analysis, the Bankruptcy Court will approve the plan. Essentially, the legal standard is that the creditors must be receiving a better, albeit minimal payment of their debt, as opposed to the company going out of business and the creditors receiving $0.00. If this sounds like the best option for you, do not hesitate to hire one of our knowledgable bankruptcy attorneys today.
Contact our experienced New York firm
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq.today to schedule a consultation and discuss your options.