While many businesses may struggle with financial problems from time to time, not all of them need to worry about bankruptcy. If your business is struggling financially then it can be difficult to determine if you are in need of hiring a professional bankruptcy lawyer and filing for chapter 11 bankruptcy. Here is a quick overview on chapter 11 to help you make an informed and wise decision.
What is Chapter 11 Bankruptcy?
Available to all businesses and individuals, chapter 11 is part of the Bankruptcy Code of the United States. When a company can no longer afford to pay off its creditors and debts, they have the legal right to file for protection in a federal bankruptcy court under chapter 11. One of the main benefits to filing for chapter 11 bankruptcy is that the company often keeps control of the business and its operations while being subject and monitored to the jurisdiction of the courts.
Benefits to Filing Chapter 11
One thing that differentiates chapter 11 bankruptcy from others is that it allows reorganization or restructuring of the business, under the courts oversight. A company in debt may be able to acquire new loans and financing with favorable terms by filing for chapter 11, so long as they provide the new lenders with priority on the business’s future earnings. The company is often also protected from other litigation that may arise during the bankruptcy period with an automatic stay.
One of the benefits to chapter 11 is that the company is often named as the trustee of the reorganization and operations of the business. More often than not, unless another trustee is appointed, the debtor or company acts as trustee. This allows the company to still operate and have a say in the decision making during the restructuring phase.
Who Should File for Chapter 11 Bankruptcy?
It may be a good idea to speak to a bankruptcy lawyer if a company has excessive bills that they are unable to pay. If your business is being hounded by collection agencies and creditors on a daily basis for bills that you are unable to pay then it might be time to consider filing for chapter 11 bankruptcy.
It’s likely you and your business have been under an immense amount of stress and pressure with the company’s current financial situation. To ease some of this burden and strain, you may want to consider speaking to a professional bankruptcy lawyer like us here at Brent George Law. We offer to alleviate some of the stress and determine what your options are. Filing for chapter 11 bankruptcy may be in your best interest and we can help you determine if it’s the right decision for you and your business.