Is your business in financial turmoil? If this is the case, you might want to file business bankruptcy Chapter 11. Several well-known businesses have filed for bankruptcy in hopes of making it out of financial trouble.
No business owner wants to see their business go into debt. A business that’s in debt might fail. By filing business bankruptcy Chapter 11, a small business can restructure its finances.
Read on to learn more about business bankruptcy Chapter 11. You’ll learn when it’s the right option.
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What Is Business Bankruptcy Chapter 11
Business bankruptcy Chapter 11 is an option for small businesses. It also goes by the name of “reorganization” bankruptcy. It allows a business to reorganize its debts.
As the business works on restructuring its finances, it can still operate. This allows it to pay the bills. You can think about it as a fresh start.
How Does Business Bankruptcy Work
You may file small business bankruptcy voluntarily. Some small businesses might have it forced on them. The latter can happen when at least three creditors seek to file a petition with the bankruptcy court.
Filing business bankruptcy stops creditors from taking action. This is temporary. It gives the business four months to develop a reorganization plan.
If the business can’t develop one within four months, the business may seek an extension. It can be extended to 18 months. After this period, creditors can proceed to develop their own reorganization plans.
The plan serves as a contract between parties. It outlines how the business will operate and seek to pay its financial obligations. It’s common for these plans to include downsizing.
The creditors must accept the reorganization plan. It’s likely for them to accept it. From there, it must be approved by the bankruptcy court.
You can hire a business bankruptcy attorney to assist you with the process. This way you can avoid any major issues and have peace of mind.
Advantages To Filing Business Bankruptcy Chapter 11
You might be asking, “Are there any advantages if I choose to go with this route?” Yes, there are several advantages.
The biggest one is that your business can continue to operate during the process. While the business operates, it can generate cash flow. This can help the business repay its debts faster.
Filing for business bankruptcy Chapter 11 keeps creditors at bay. Most creditors understand that they can recover their money. As a result, they’re receptive to the court’s order.
Is your business going through the bankruptcy process? You should consider debt financing. Dip financing can help you regain stability and grow your business.
File for Business Bankruptcy Chapter 11
There’s hope for small businesses that are struggling with debt. If your business is in this position, filing for business bankruptcy chapter 11 might be a good idea. Don’t wait any longer to save your business.
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