It is not easy to own, operate and sustain a small business. The expenses associated with start-up and day-to-day operations may outpace your ability to manage these costs, and this could lead to financial trouble. Many businesses just shut down when they reach a certain point in their money-related struggles, but that may not be the only option for your business.
While bankruptcy is likely not your first choice, it could be the most viable and most reasonable option. This step does not necessarily mean that you must shut your doors and lose valuable assets, but it could be the right path to a stronger, more sustainable financial future.
What can Chapter 11 do for me?
Chapter 11 bankruptcy is essentially the reorganization of the business debts owed by the applicant. If you meet the obligations outlined in your bankruptcy plan, you can emerge from this process to a more stable financial situation. While Chapter 11 can be a complicated process, it is often a suitable choice for companies facing precarious and grave financial situations.
How Chapter 11 bankruptcy works
This type of bankruptcy restructures debts and reorganizes certain aspects of a business' financial operations. If you take this path, you may not have to shut down your business, and it is quite likely that you can continue to operate and eventually turn a profit again. The following are a few things you may need to know about how this process works:
- Some well-known businesses filed for Chapter 11 bankruptcy and are still in operation, such as General Motors and United Airlines.
- Most of the time, businesses, LLCs and corporations file for Chapter 11 bankruptcy, and, very rarely, an individual who does not qualify for Chapter 7 or Chapter 13 may have this option.
- While under the protection of Chapter 11 bankruptcy, a business will need the court's permission to make important financial decisions.
- The applicant can present a plan for debt reorganization, and with the court's approval, may follow this plan until obligations are met.
The nature of your debt restructuring plan relies heavily on the details of your unique situation. It may include liquidating assets, downsizing business operations or negotiating with creditors.
The future of your business
If your business is in financial trouble, there is much at stake. There is no time to lose in taking the right steps to save your business and secure a better future. Overwhelming debt may affect your operations, but you have certain options with which you can fight back.