Just like anyone else, businesses can struggle through difficult financial situations. When this happens, the business owner may worry about what the future holds. If a business is facing a great amount of debt, it may be time for the owner to consider filing for bankruptcy.
Chapter 11 bankruptcy is also known as business bankruptcy. Filing for chapter 11 business bankruptcy can allow a business to stay open and continue the daily operations. When the business remains open, it is allowed to keep employees on staff while a reorganization plan is put in place. This plan lets the business owner negotiate or repay debts over a period of 5 years.
How Do You File for Chapter 11 Bankruptcy?
To begin the process of filing for business bankruptcy, the company or individual needs to file a bankruptcy petition including a financial statement, a list of assets, a list of liabilities, and a statement of any outstanding contracts or leases.
When the paperwork is filed, the automatic stay goes into effect immediately. The automatic stay prohibits collectors from harassing debtors through collection activities while it is in effect. This may include collection calls, letters, bank restraints, foreclosures, repossessions, or lawsuits. This allows debtors a sense of ease as they begin to restructure their finances and pay back their debts.
During this process, the meeting of creditors will occur. This is a meeting between the debtor and the creditors to determine a reorganization plan for the debtor as she begins to pay back debt. The plan is required to be approved by the bankruptcy court.
When a business is granted Chapter 11 bankruptcy, it will prevent any creditors, vendors or banks from shutting down the business. Claiming bankruptcy allows for a slow stream of payments to the creditors, letting the business continue to receive or increase revenue.
The overall goal when filing for Chapter 11 business bankruptcy is for the business to create a profit again. This is why it is important to keep the business open to increase income.
Contact our 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.