Why Do Individuals Or Companies Choose To File Chapter 11?
Individuals or companies choose to file Chapter 11 bankruptcy to keep their businesses running and give them a chance to pay off their creditors through a repayment plan. Of the three bankruptcy types used for personal and business bankruptcy filings, which include Chapter 7, Chapter 11, and Chapter 13 bankruptcy, while Chapter 11 is the most debtor-friendly, it is also the most complex option because of the filing requirements.
With a Chapter 11 bankruptcy, you must submit your paperwork to the bankruptcy court, and it will determine whether your reorganization plan is fair to everyone involved and reasonably manageable to ensure that your business can repay its debt as proposed in your filing. Additionally, your paperwork must comply with the U.S. Bankruptcy Code, possibly state bankruptcy exemptions, and other laws that may impact the bankruptcy process.
In this light, it’s recommended that you work with a reputable Harrisburg Chapter 11 bankruptcy lawyer to ensure your filing complies with all relevant laws and avoid losing your business.
Should You Choose Chapter 11 Bankruptcy?
There are various circumstances under which choosing Chapter 11 might make the most sense. However, it’s in your best interest to have an experienced Harrisburg Chapter 11 bankruptcy attorney evaluate your specific situation carefully. Meanwhile, below are some viable reasons to choose Chapter 11:
Your Business Has Accumulated Significant Debt But Is Still Profitable
Maybe your business is profitable but can’t meet its current financial obligations because of unpredictable market conditions or past mistakes. When you file for Chapter 11, you can restructure your business’s debts, continue operating, and decrease your financial obligations while creating a repayment plan from your creditors.
You Don’t Want To Liquidate Because You Believe In Your Business
Chapter 11 might make sense if you believe your business can recover if not for your overwhelming debt. Businesses typically choose this chapter if they have a strong market presence but require some time to fix their finances to generate revenue. Often, however, many Chapter 11 cases are filed to do a structured sale, or the case results in a sale.
You Want To Remain In Control Of Your Business
Among the primary advantages of choosing Chapter 11 is that you may have the chance to remain in control of your business during the bankruptcy process. You retain control of all decision-making and daily operations provided that you comply with creditors’ requests and the reorganization plan.
You Have Valuable Assets But Are Overwhelmed With Pressure From Creditors
The automatic stay granted by Chapter 11 will effectively stop creditors from seizing your business’s assets or suing you while you’re reorganizing your business.
You Want To Renegotiate Contracts
Chapter 11 lets you renegotiate your business contracts, such as employee agreements, leases, and supplier contracts, giving you the flexibility to reduce costs, streamline operations, and eliminate financial burdens weighing down your business.
Let Our Seasoned Harrisburg Chapter 11 Bankruptcy Attorneys Save Your Business
If you are thinking of filing for Chapter 11 bankruptcy, our Harrisburg Chapter 11 bankruptcy lawyers at Cunningham, Chernicoff & Warshawsky, P.C. are here to assist you. Call our office or contact us online for a free case evaluation with one of our Harrisburg Chapter 11 bankruptcy attorneys. They can assess your situation, explain your options, and ensure you navigate the bankruptcy process successfully so you can get your business back on track.