subject: Getting Through Chapter 11 With A Bankruptcy Attorney [print this page] Running a business is a complicated affairRunning a business is a complicated affair. Even when a business is functioning well, unexpected events can alter situations for worse. Unpaid debts can multiply quickly and there comes a point where a company needs to cut its losses and restructure its assets. The United States government offers Chapter 11 reorganization for this very purpose. While the process may seem daunting, a solid plan and a good bankruptcy attorney can help your business regain its footing.
In the late 1970s the United States government reformed its laws designed to help struggling businesses in the country. Previous laws helped companies and individuals in debt shut down, liquidate their assets, and repay their debts as best as possible. This process worked well for many situations, but new business practices in a modern world brought new questions about failing companies. The laws in the United States Code were rethought to include provinces for companies struggling with debt that wanted to restructure and continue on.
Before filing for Chapter 11 reorganization, it is important to decide whether it is a proper fit for your company's situation. While salvaging your business can seem like the most appealing option, sometimes a clean break can be more beneficial in the long run. Filing for reorganization involves creating a long-term plan on how to restructure assets and revitalize your revenue stream. Larger organizations typically have more flexibility to make this work, but smaller companies have been known to find success with the process as well. Meeting with an expert such as a bankruptcy attorney is a good first step on deciding whether you are a good candidate for the Chapter 11 plan.
A good bankruptcy attorney will also guide you through the first steps of Chapter 11. To begin the process you must file a petition with the U.S. government. This opens a new court case, and from this point on your business would be overseen by the court. Your company's main focus is now working with the court to create a plan to reorganize the company's assets and repay its debts over time. The court monitors your assets and practices to determine whether your plan will be effective. If the court confirms the plan, it will continue to monitor your business until the plan's completion.
For this reason, creating a good reorganization plan is crucial. The company is expected to begin turning a profit, so unnecessary assets are usually sold or reduced in order to regain capital. A new business plan helps to eventually pay back the debts incurred, but the debts need to be considered and prioritized until then. The court expects to see a timeline for debt repayment as well as a plan to revitalize the company. Because of these requirements of Chapter 11 bankruptcy, attorney input is invaluable and often necessary. A liaison to the court helps relieve some of the stress of reworking a business. A good lawyer should be able to guide you through the process.
If you do decide to file, having a good plan and a bankruptcy attorney will make your court approval more likely. Remember, the court exists to help you get back on track, and there are many different routes available in times like these. An honest look at your goals and priorities should help lead the way.
