Running a small business can be an exciting endeavor. However, it can also be risky, especially given today’s uncertain economic climate. One way for businesses to handle debt and continue to operate is by declaring Chapter 11 bankruptcy.
Most people are familiar with Chapter 7 or liquidation bankruptcy, but what is Chapter 11 and is it right for you? Here are a few of the reasons a business may want to choose Chapter 11 bankruptcy:
- Hold onto assets: Chapter 11 bankruptcy allows your business to continue to operate while simultaneously paying back creditors, thus avoiding the need for asset liquidation. Depending on the size of your company, however, some or all of your ownership may be transferred to creditors to pay debts back.
- You design a restructuring plan: When a business files for Chapter 11, it is given first right when determining a restructuring plan. This allows you to come up with a plan that is beneficial to you and your employees.
- You can pay debts back over time: One of the advantages of filing for Chapter 11 is that your business is able to pay back debts over time and through making payments.
- All debts may be discharged: Under Chapter 11, all debts are dischargeable.
Successful navigation through bankruptcy procedures requires legal competence and experience. Given the many types of bankruptcy, you may be unsure about which one is appropriate for your situation. With the counsel of a skilled attorney, you can make decisions for your business with confidence.