How Chapter 11 Can Make Your Business Stronger

If you are considering personal bankruptcy, the two types of bankruptcy you might be able to file for are Chapter 7 and Chapter 13. However, if you are considering filing for bankruptcy as a small business, another option available to you is Chapter 11. This is a form of bankruptcy your lawyer might recommend if your goal is to keep your business open.

When to Choose Chapter 11 Bankruptcy

Chapter 11 is a type of bankruptcy you would choose if there is a potential for you to turn your business around and your small business is a partnership. With a partnership, there are two or more individuals who own the business.

The Advantages of Chapter 11

With Chapter 11 bankruptcy, you will be able to finish your bankruptcy much more quickly and reorganize your debts so that your business can be more profitable and efficient. As a result, both your business and your employees will benefit.

How Chapter 11 Works

When you and your other partners agree to file for Chapter 11, you will reorganize your business and the business will be run under a trustee appointed by the court. You will need to speak with your bankruptcy lawyer about how you will create a plan for how you will handle your creditors. There are many strategies your business can use to become profitable again.

Strategies Used Under Chapter 11

One approach for making your business profitable might be to sell off some of your storefronts to another company. Then, you would only keep the storefronts that you are able to keep open on your own.

Another approach for Chapter 11 would be to renegotiate the terms of your loans, you may secure more financing, and you may keep most or all of your assets. Your creditors will benefit if you are able to be profitable enough to be able to make your loan payments.

Why You Need a Bankruptcy Lawyer

Chapter 11 is more challenging than other forms of bankruptcy and may not allow you to protect your personal assets. The assets of each partner could potentially be liquidated to pay creditors. The only time when this is not the case is when your business is a corporation.

Therefore, you will always want to file for Chapter 11 with the help of a bankruptcy lawyer so you can make sure that your bankruptcy will achieve your business goals and achieve the outcome that you want.