Debt and financial problems can affect businesses in a variety of ways. Many may find themselves saddled with unmanageable debt that they cannot repay. Business owners unable to pay their creditors may be forced to close their doors. In cases like these, it is often wise for a business owner to consider filing for Chapter 11 bankruptcy.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a reorganization process allowing a company to restructure its debts and assets while operating. Filing for Chapter 11 bankruptcy allows business owners to avoid liquidation or closure while allowing them time to work out an agreement with creditors on terms that will enable them to keep operating and pay off their debts over time.
What Is Involved in the Process of Filing for Chapter 11?
Filing for Chapter 11 bankruptcy involves several steps.
- The first step is the petition for relief, which means filing a petition with the court. The petition must include information about the company’s assets, liabilities, and financial condition.
- After filing the petition, the business must submit an interim report to show that it can keep operating while in Chapter 11.
- If that is successful, the court will appoint a trustee to oversee operations while bankruptcy proceedings are underway. The trustee’s job is to protect the company’s assets and ensure they’re used appropriately during this period.
- Once the case has begun, and all parties involved have been served with notice of their rights under Chapter 11, an initial meeting of creditors is held where they can ask questions about how things will work moving forward.
- After this meeting, the company will submit a plan of reorganization that must be approved before the court can implement it.
What Are the Advantages of Chapter 11 Bankruptcy for Companies?
Companies file for Chapter 11 bankruptcy to allow them to restructure their debts and, in many cases, keep operating.
The benefits of Chapter 11 include:
- The ability to continue operating while paying back creditors. This can help keep customers happy and retain talent in the company’s workforce.
- The opportunity to negotiate with creditors and set up a payment plan that works for everyone involved.
- Reduced expenses—when a company files for Chapter 11, it has more control over its finances and can reduce costs by selling off assets that are no longer profitable.
Contact an Experienced Bankruptcy Attorney
If you’re a business owner in Minnesota, you know how important it is to have a plan for when things go wrong. If you don’t have an emergency plan for when things go south, you could be in for serious trouble.
That’s why it’s so essential to contact Minnesota bankruptcy law firm Hoverson Law Offices, P.A. if you’re having financial difficulties. We can help guide you through filing for Chapter 11 bankruptcy so that your company can stay afloat and keep doing what it does best.
We target Minneapolis, Bloomington, and the surrounding Minnesota communities.