Since Chapter 11 bankruptcy is used for businesses that are in financial distress, it is often referred to as business bankruptcy. During this time, it allows businesses to keep their doors open. These businesses can still function with their everyday operations while working toward paying off their debts. This is the main procedure businesses use to plan their finances. Bankruptcy options for individuals can be handled through Chapter 7 and Chapter 13 bankruptcy.
How do I file for a business bankruptcy?
As a business owner, you never want to see your business fail. You have put hard work and money into that property and created something worthwhile. If your business is struggling, you should consider Chapter 11 bankruptcy. This can allow your business to continue your day to day operations. With your business still in operation, your employees can keep working as well.
First, you will need to file a bankruptcy petition. This will include a financial statement, a list of all assets, a list of liabilities and a statement of any outstanding contracts or leases. Once the paperwork is filed, an automatic stay is put into effect. With this in place, you will be given the space you need to work on your finances and will not have to deal with the harassment of creditors.
What happens at the meeting of creditors?
At the meeting of creditors, creditors that you owe the most money to have an option to attend in order to learn about your repayment plan. They may wish to understand your situation better. Your attorney will be present with you to help explain how you will accomplish your plan. This plan is made with your attorney to continue paying your operating costs while paying off debt at the same time. The plan must be approved by the bankruptcy court to ensure your status. Debt payments that your business built up are restructured. This means that these payments will now be paid throughout the course of a five-year plan.
When you are granted Chapter 11 bankruptcy, it will stop the shutdown of your business by any creditors, vendors or banks. Instead of sending all income to those you owe money to, claiming bankruptcy will allow for a slow stream of payments to your creditors. This will allow your business to make a revenue stream. Chapter 11 bankruptcy also allows businesses to keep their line of credit and to receive any money owed to it. Insurance money from an open claim is allowed to remain flowing. Since the main goal of Chapter 11 bankruptcy is to allow a revenue stream for your business, your business will remain open and operating to create a profit.
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.
