You know that bankruptcy is an option for individual consumers who are overwhelmed by debt and unable to manage payments owed to creditors, but you may not realize that bankruptcy is also an option for business entities that have overwhelming debt as well. Chapter 11 bankruptcy may offer relief and debt reorganization for businesses in difficult financial circumstances.
If you own and operate a business, you know how expensive it can be to run day-to-day operations and keep up with your financial obligations. Over time, these expenses can become overwhelming, eventually resulting in a significant amount of debt. By filing for Chapter 11, you may find relief and a solution to some of your California business' complex money concerns.
What you need to know about Chapter 11 bankruptcy
Under Chapter 11 bankruptcy, the applicant must also submit a plan for profitability for after the bankruptcy process is complete. This may include opening up new revenue streams and finding a way to lower costs and expenses. Chapter 11 generally takes longer than other types of bankruptcy, but it also allows your business a chance to continue operations post-bankruptcy. The process for this type of debt reorganization includes the following steps:
- Completing and filing the bankruptcy petition
- Completing details of the reorganization plan
- Confirmation and discharge of debts
The goal of Chapter 11 bankruptcy is not to close the business and get rid of remaining debt. The intent is to rid the business of certain debt, reduce costs and become profitable once again. While often associated with larger businesses and corporations, Chapter 11 is technically an option for smaller businesses as well.
Not every business will qualify for Chapter 11 bankruptcy, but it could be the best choice for you and your unique situation. Understanding all of the options available to you is the first step toward securing a stable and strong future for your business.
Legal guidance during a difficult time
You may be getting calls from creditors, and you may be unable to effectively manage your debt and keep up with the current obligations. This feels hopeless and overwhelming, but it is not the end of the road for your business. It is possible that you may have a way out through Chapter 11 bankruptcy.
It can be beneficial to understand your options by reaching out to an experienced bankruptcy attorney before you make any important decisions about your business. Bankruptcy may not be your first choice, but it can offer you a way to deal with debt and begin to make a profit once again.