It’s a sad reality that many businesses don’t end up succeeding. During the COVID pandemic, it was reported that 30% of small businesses had to either temporarily or permanently shut down. While each business means time, effort, money, and optimism for the future, it’s important to know what to do when your business is in danger of failing.
As a bankruptcy lawyer like our friends at the Law Offices of Neil Crane can explain, you have a chance to get out while you can. While declaring bankruptcy carries its own burdens, sometimes it’s the best way to get out of a money-sink like an unprofitable business. But if you still want to keep your business up and running after declaring bankruptcy, Chapter 11 might be best for you.
Read on to learn more about Chapter 11 bankruptcy, and see how a qualified bankruptcy lawyer can make a difference.
What are my options for bankruptcy?
When you need to declare bankruptcy for your business, your options are typically either Chapter 7 or Chapter 11 bankruptcy. If you decide to file Chapter 7 bankruptcy, you’ll have to liquidate all of your assets. In a business context, this means selling off all of your work-related assets (such as tools, appliances, furniture, and everything else in your business) to pay off your credits. It’s final, and it usually means your business is gone for good afterwards.
What is Chapter 11 bankruptcy?
Chapter 11 bankruptcy involves restructuring. When you file Chapter 11 bankruptcy, you’re giving your business a second chance, and you’re able to fight to correct your course and become profitable again. Chapter 11 bankruptcy isn’t easy, though. While you won’t have to liquidate your assets, you’ll still have to navigate a serious legal process.
What steps are involved in Chapter 11 bankruptcy?
If you want out from under your debts but you still want to keep your business, Chapter 11 bankruptcy can help. However, all business won’t continue as usual. Major decisions will need to be made by a bankruptcy court, and your company will have to go through a major restructuring.
What does the reorganization involve?
The reorganization involves several steps. You’ll have to draft a reorganization plan and submit it to the court, and the SEC will have to examine the plan to make sure it’s complete. Of course, creditors or stockholders will have to vote on the plan before you enact it, and once the court confirms the plan you’ll have to stick with it until all your creditors are paid off and satisfied.
How can a lawyer help?
The right bankruptcy lawyer can walk you through your bankruptcy and make sure you’re aware of all the steps you’ll have to complete. A lawyer can also help you decide what type of bankruptcy to declare in the first place. It’s difficult to choose your financial future, and with business bankruptcy, you’ll have a lot at stake.
Don’t hesitate to get qualified legal help from a bankruptcy lawyer today.