Reasons Your Business Should Consider Chapter 11 Bankruptcy
Chapter 11 bankruptcy is among the most common types of bankruptcy for businesses in South Florida. It is a type of reorganization bankruptcy, which means that your business will go through a process of filing the bankruptcy petition, proposing a debt reorganization plan, having that plan approved by the court, making regular payments on the plan while serving as a “debtor in possession,” and eventually being eligible to have certain debts discharged.
There are a wide range of benefits to Chapter 11 bankruptcy for business owners. If your business is struggling financially but you want to continue operating the business, Chapter 11 bankruptcy could be a solution for you. The following are some of the key reasons that business owners should consider a Chapter 11 bankruptcy filing.
Keep Your Business Open and Operational
Unlike liquidation bankruptcies, Chapter 11 bankruptcy and other forms of reorganization bankruptcy are usually preferable to business owners who do not want to close their companies since reorganization bankruptcies do not require business closures. To be clear, during and after your Chapter 11 bankruptcy case, your business will remain open and operational. You do not need to close while your business is in the midst of its repayment plan, and you can remain open and operational once the bankruptcy case concludes.
Sell Assets with Liens
Outside the context of bankruptcy, your business is likely to have difficulty selling off assets that are currently encumbered by liens. However, you can ask the bankruptcy court to sell these assets as part of your Chapter 11 case, allowing you to obtain funding for your business that can help with its financial health in the long term.
Have a Business in Better Financial Health
Due to the reorganization of debt that occurs in a Chapter 11 plan, businesses that file for Chapter 11 often come out of the bankruptcy in better financial health. The process of debt reorganization can allow the business to become current with creditors and to restructure the terms of their debt with certain creditors.
Gain Flexibility with Contracts
A business that files for Chapter 11 bankruptcy with existing unexpired leases and executory contracts that are not benefitting the business can often get out of those contracts. In other words, businesses that file for Chapter 11 bankruptcy can gain flexibility when it comes to certain types of contracts that they do not need after reorganizing debt.
Contact a West Palm Beach Bankruptcy Attorney Today
Chapter 11 bankruptcy can benefit businesses in South Florida in many different ways. For a wide range of businesses that do file for Chapter 11 bankruptcy, the bankruptcy case provides a way to reorganize debt, become current with creditors, and make plans to remain solvent. To find out more about whether Chapter 11 bankruptcy is right for your business, you should get in touch with one of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller. We can speak with you today about your business’s financial circumstances, and we can answer any questions you have about business reorganization bankruptcies. Contact our firm for additional information.
Sources:
law.cornell.edu/uscode/text/11
uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics
