As a business owner, you’ve worked hard to get your business up and running. You’ve put in countless hours and invested your savings into making it a success. But sometimes, no matter how hard you work or how much money you invest in your business, things don’t go as planned.
You may find yourself struggling with debt, perhaps from suppliers or vendors who have stopped shipping products because they haven’t been paid. You may even find yourself dealing with legal action from clients who claim that their services weren’t rendered as promised.
Whatever the reason for your financial troubles, it can be difficult to know where to turn for help. If this challenge sounds familiar, it might be time to consider filing for Chapter 11 bankruptcy protection in Minnesota with Hoverson Law Offices P.A.
Chapter 11 Bankruptcy: What Does It Involve?
Chapter 11 bankruptcy is primarily for businesses that want to restructure their debt and keep their assets. This type of bankruptcy is also considered “reorganization.” This differs from Chapter 7 bankruptcy, which involves liquidating the debtor’s assets.
The United States Trustee has oversight responsibilities in Chapter 11 bankruptcy cases. They’re tasked with making sure that the debtor is following all laws and regulations related to their case. This trustee will review all financial records, including payroll expenses and taxes. The bankruptcy court will also examine these records to verify that they are accurate.
In a nutshell, Chapter 11 bankruptcy allows you to:
- Keep your business running while you reorganize your debts
- Protect yourself from creditors while you work out a repayment plan with them
- Reevaluate contracts with your suppliers and employees so that you can make the most of your assets
When Should You Consider Filing for Chapter 11 Bankruptcy?
There are many reasons why you might want to consider filing for Chapter 11 bankruptcy protection. If you are experiencing problems making ends meet in your business operations, have accrued significant debt but don’t have enough income to pay it off, or if your creditors have threatened to take legal action against you to collect their money, then it may be time to meet with an attorney about filing for bankruptcy.
What is Involved in the Process of Filing Chapter 11 Bankruptcy?
The first step is to meet with a lawyer who specializes in bankruptcy law. Your lawyer will explain your options and help you decide if filing for bankruptcy is right for you. If so, they will help you complete all the paperwork required by the court and submit it on your behalf.
In Chapter 11 bankruptcy, the debtor is referred to as a “debtor in possession.” The debtor in possession is responsible for running the business during the reorganization process.
Once the court accepts your petition for Chapter 11 bankruptcy protection, your creditors can no longer contact you about collecting debts listed on your petition (except for certain types of debts). This gives you time to recover financially and pay off any remaining debts without being harassed by creditors while they wait to be paid back in full.
Meeting With Creditors
In Chapter 11 bankruptcy, there are two main types of creditors: secured and unsecured. Secured creditors have liens on specific assets that will be used to pay them back. Unsecured creditors do not have liens but may be entitled to receive payments from the Chapter 11 bankruptcy estate.
Some forms of secured and unsecured debt can also fall under the category of “priority claims.” Priority claims are entitled to payment in full as soon as the debtor receives a distribution of funds.
The meeting of creditors is an arrangement where creditors can ask questions about the debts, get information about how much they’ll be paid back, and learn about what happens next.
Chapter 11 Bankruptcy Credit Counseling
Before filing for Chapter 11 bankruptcy, all debtors must complete a credit counseling course. This helps ensure that they understand what their options are when it comes to restructuring their debts, as well as how they will be affected by such an action. The course also provides information on how to manage their finances once they have filed for bankruptcy protection.
Subchapter V for Small Businesses
If you are a small business debtor and your case meets certain requirements, you may benefit from a streamlined process. Subchapter V is available to help small businesses get out of debt without completely liquidating their assets. This subchapter offers special provisions that allow small business debtors to move through the Chapter 11 process faster and with reduced expenses due to the absence of a creditors’ committee.
Your experienced Minnesota bankruptcy attorney can help you determine if Subchapter V is an option for your business.
How Hoverson Law Offices, P.A. Can Help Minnesota Business Owners
At Hoverson Law Offices, P.A., we understand that filing for Chapter 11 bankruptcy can be a difficult time for your business. The process can seem confusing, and you may be wondering what to expect.
Hoverson Law Offices, P.A. is here to help you navigate your options and take action that’s right for your business. Michael K. Hoverson has a 35-year history of helping individuals and business owners recuperate after financial challenges.
As an experienced attorney with a history of helping clients through Chapter 11 bankruptcy proceedings, he has seen everything from small businesses to local communities affected by economic downturns. He knows how important it is to get the right advice from someone who understands the process—and he has the experience, knowledge, and expertise to guide you through it every step of the way. With this knowledge, Mr. Hoverson can provide his clients with the best possible advice and representation throughout their cases.
We target Minneapolis, Bloomington, and the surrounding Minnesota communities.