Chapter 11 bankruptcy and your reorganization plan
Posted by Ronald I. Chorches Friday, November 3rd, 2017 | 151 views
Chapter 11 bankruptcy is a process of debt reorganization primarily intended for businesses that are underwater with debt problems. Usually corporations are the ones that file for Chapter 11, but small businesses might file for it as well. Individuals might also file for Chapter 11 in limited circumstances.
Although the Chapter 11 process can take more time and cost more money than other types of bankruptcy, there are advantages that come with it.
For example, debtors are provided more time to create a plan to pay back their debts and to reorganize their businesses. In most cases, the primary purpose of Chapter 11 is to aid businesses to reorganize and trim costs in such a way that they can become more profitable and financially stable following bankruptcy.
Either the debtor business or creditors of that business can file for Chapter 11. When creditors file, it’s known as an involuntary Chapter 11 petition. After it has been filed, an automatic stay will go into effect. This ceases all debt collection activities on the part of creditors.
The debtor will then create a business and debt reorganization plan. The debtor will also negotiate more realistic payback terms with creditors.
After filing the petition, the business will continue operations uninterrupted. With the assistance of the bankruptcy court, the debtor will also create a debt repayment plan. Repayment amounts will usually be less than the original amount of the debt.
Numerous businesses throughout the nation have saved their bottom line — and the future viability of their operations — via Chapter 11 bankruptcy proceedings. Could your business benefit from Chapter 11 bankruptcy? A Hartford business and commercial bankruptcy attorney can help.