Can Chapter 11 Bankruptcy Help Your Small Business?
Like most business owners in Florida, you put every effort into your business. Unfortunately, some things are simply out of your control. Despite long hours, sleepless nights and an extraordinary amount of work on your part, your business’ debt has grown exponentially. While you might feel discouraged, Chapter 11 bankruptcy could be the solution.
Chapter 11 bankruptcy is distinctly different from Chapter 7 and Chapter 13, which are both forms of consumer bankruptcy. You may have heard of Chapter 11, although depending on your source, it might have always been in relation to large corporations. Small business owners can also file for Chapter 11.
What Is Chapter 11 Bankruptcy?
Your business is not going to lose all of its assets if you file for bankruptcy. Instead, Chapter 11 actually creates an opportunity to address overwhelming debt or significant financial strain. It does this by:
Creating manageable reorganization plans
Making repayment plans
When filing, you will need to create a proposed post-bankruptcy plan. This plan should include things like how you intend to reduce costs or create new sources of income. These plans also usually include plans for postponing creditor payments, which is an important part of getting a business back on financial track.
What Are the Benefits?
Bankruptcy still has a stigma attached to it. Because of this stigma, many business owners who could benefit from bankruptcy actively put off filing. This completely overlooks the many benefits, including avoiding total liquidation.
Perhaps the biggest benefit aside from avoiding closure is the opportunity to rethink profitability opportunities. Not many people get a second chance at restructuring their business like this, so it is important to take advantage of the opportunity. Small businesses often come out on the other side of Chapter 11 bankruptcy stronger than ever before.
I Never Filed for Chapter 11 Bankruptcy
There are two ways in which you might find your small business in Chapter 11 bankruptcy. The first is if you take the initiative to file. The second is if a creditor decides to file. The latter is an involuntary petition.
The thought of going through Chapter 11 bankruptcy on your own can be worrisome. However, as a small business owner, you know just how important it is to align yourself with the right kind of help and support. Securing the guidance of an experienced bankruptcy attorney is just one strategy that small business owners utilize when getting their finances back on track.