When a business is deep in debt, it needs a lifeline. Chapter 11 bankruptcy can be the solution it needs. While typically, Chapter 11 was a cumbersome process for larger corporations, new changes in the code are designed for small businesses.
This allows Chapter 11 to serve as a reorganization to earn your way out of debt by paying only a percentage of what is owed to your unsecured creditors, breaking leases, and catching up on taxes and mortgage payments.
Let our experts at Daigle Law Office represent your business during a Chapter 11 bankruptcy proceeding.
What Is Chapter 11 for Business?
Chapter 11 bankruptcy is a legal process that allows businesses to reorganize their finances and debts. Unlike Chapter 7, which involves liquidation, Chapter 11 aims to keep the business operational while restructuring its financial obligations.
There are many aspects to Chapter 11, including these key elements:
· Reorganization: The business develops a plan to restructure its debts and continue operations.
· Automatic stay: Creditors are temporarily prevented from collecting debts.
· Court oversight: The bankruptcy court oversees the reorganization process.
· Potential for debt reduction: The business can reduce its debt burden through negotiation.
Businesses must hire an experienced Chapter 11 attorney to represent them during the bankruptcy proceedings.
Benefits of Filing Chapter 11
Chapter 11 bankruptcy allows businesses to reorganize their debts and get relief from creditors. There are numerous benefits to filing for Chapter 11, including these advantages:
· Automatic stay: Temporarily halts creditor collection efforts, allowing the business to focus on reorganization.
· Business continuity: Allows the business to continue operations while developing a restructuring plan.
· Debt restructuring: Provides an opportunity to negotiate with creditors and reduce debt obligations.
· Time for reorganization: Offers a structured period to create and implement a plan for financial recovery.
Perhaps one of the most significant benefits is the opportunity for the business to emerge from bankruptcy stronger and healthier.
What Is the Chapter 11 Bankruptcy Process?
A Massachusetts business filing for Chapter 11 bankruptcy can experience a complex process.
With the help of their bankruptcy attorney, businesses need to follow these steps:
1. File the Petition: First, a business must file a Chapter 11 bankruptcy petition with the court.
2. Automatic Stay: An automatic stay goes into effect after the business files for bankruptcy, suspending collection attempts by creditors.
3. Create a Reorganization Plan: A business can create a plan to restructure its debts and finances with the help of a bankruptcy attorney.
4. Creditor Review: Creditors will review the reorganization plan and decide whether to accept it.
5. Court Approval: The bankruptcy court must approve the reorganization plan for it to take effect.
6. Reorganization and Emergence: If the plan is approved, the business will implement the plan and become a reorganized entity following bankruptcy.
Who Should File Chapter 11?
Businesses of all types and sizes can file for bankruptcy to ease their financial stress and restructure their debts. Specific industries or business types tend to utilize this option more than others. Some common types of businesses that file for Chapter 11 include larger corporations with complex financial structures, airline and automotive companies, retailers, and real estate developers.
Small businesses can also file for Chapter 11 to ease their financial burdens.
If a company determines whether they should file for Chapter 11, they should contact our bankruptcy attorneys.
Hire Our Trusted Bankruptcy Attorneys
If your business faces high debts or financial stress, get help from a bankruptcy attorney. They can help you determine if Chapter 11 is the right option. Contact Daigle Law Office today for a free and confidential consultation with Attorney Peter M. Daigle, a skilled and reputable bankruptcy and foreclosure defense attorney in Massachusetts. Call our Cape Cod office at 508-771-7444 or our Norwell office at 781-561-1220.