A Chapter 11 Business Bankruptcy is a strategy businesses may employ to solve a difficult financial situation without having to close their doors. Chapter 11 allows businesses to reorganize assets and debts making it possible to return to being a strong, more profitable company.
Many debts that a business has accumulated may be renegotiated in a Chapter 11 bankruptcy. Credit card debt, unsecured bank loans, liability for broken contracts or leases, and certain tax obligations may be renegotiated so that a business emerges from the bankruptcy on a stronger financial footing.
Protections Offered Under Chapter 11 Bankruptcy Include
- An automatic stay prohibiting creditors from attempting to collect on debt during the bankruptcy process
- A business right to sell assets that are free of liens, claims, and other encumbrances to pay creditors subject to court approval
- The possibility of being released from contracts and leases without being sued for breach of contract
Types of Bankruptcy Businesses Can Consider
Businesses in a difficult financial situation may consider either a Chapter 11 or Chapter 7 Bankruptcy depending on their goals and unique circumstances. While a Chapter 11 Bankruptcy reorganizes individual or company assets and debt to pay what is owed creditors, a Chapter 7 liquidates unsecured debt after selling off non-exempt assets to pay creditors. Depending on the situation, a Chapter 11 may enable a business to continue, whereas a Chapter 7 may result in closure of the business. It is important to work with an experienced bankruptcy lawyer to understand what strategies may work for your unique business.
Contact a Bankruptcy Lawyer for Assistance Today
The first step is to discuss your financial goals with an experienced bankruptcy lawyer to decide if Chapter 7 or 11 Bankruptcy can help you reach your financial goals. Contact Charles E. Covey for more information today.
