Chapter 11 Bankruptcy
When a business decides to file for Chapter 11 bankruptcy, it is making a plan to repay their debt and get back on track. The whole purpose behind Chapter 11 is for a reorganization of debt, which works well for corporations, partnerships and businesses. A Business Bankruptcy does not always involved a file a liquidation bankruptcy and sell all of its assets and close its doors. There are options available to companies who have gotten behind and need a little help to get back on the right track.
In today’s economy, it is difficult to drive into a familiar shopping center and not notice that many of the retail stores, service establishments and small eateries have gone out of business. Perhaps if they had filed for Chapter 11, they would not have had to give it all up? Some large companies file for Chapter 11 again and again, in an effort to keep the doors open and the bills paid.
The concept that makes Chapter 11 so viable is that it is a restructuring of person’s or business’ debt, not the company itself. This means that the business retains its leadership, policies and operations. Doors stay open and money continues to be made.
Some of the reasons one might consider filing for Chapter 11 include:
- Debtors keep control of assets.
- There is no limit on the amount of debt.
- Good for large businesses needed to restructure their debt.
- Debtors can continue to stay in business.
- Can reorganize, even if it is not debt related.
- Does not affect the personal assets of shareholders.
- Can retain ownership, leadership and upper management.
- Potential of leaving the plan as a profitable business!!
However, if any of the following apply, perhaps Chapter 11 is not the bankruptcy option for your or your business.
- The debtor must propose the debt repayment plan. There is no trustee to handle the selling of assets or prepare a repayment plan for you.
- The fees for filing for Chapter 11 are high. This is why many propose Chapter 11 bankruptcy for companies as opposed to individuals. It costs over $1,000 to file for Chapter 11.
- This reorganization plan may not work as well for individuals or small businesses.
- Creditors participate in the process of approving the proposed reorganization plan.
- The rate of successful Chapter 11 bankruptcies is low, 10% or less.
- When your company makes big decisions, the court system may have the final say.
Filing for Chapter 11 bankruptcy can be overwhelming. You will need an experienced Bankruptcy Attorney that is near your location that specializes in Chapter 11 bankruptcies. cases like yours right here in Merced, California. The Law Office of Jeffrey D. Rowe is the answer.