How To File Bankruptcy For Your Business
LEARN MORE ON CHAPTER 11 BANKRUPTCY IN MEDIA, PA; RISING SUN, MD & STATEN ISLAND, NY
Chapter 11 is a type of bankruptcy that is available to both individuals and businesses, but is overwhelmingly utilized by businesses that are unable to service their debts or pay their creditors. Chapter 11 is an alternative to Chapter 7 bankruptcy that allows a business to reorganize its debts so it can keep operating, thereby maintaining its potential profitability. In Chapter 7, on the other hand, all of a business’s assets are liquidated and the proceeds are used to pay creditors, causing it to cease to exist.
Purpose of Chapter 11 Bankruptcy
Many businesses file for Chapter 11 when the owner believes that the value of the business as an operation is greater than the amount of money that could be obtained through liquidation. Chapter 11 allows the business to reorganize its debts in a way that creditors will receive what they are owed while the business continues to operate. The goal when filing for Chapter 11 is to give the business an opportunity to emerge from bankruptcy as a profitable entity.
What Happens When A Business Files Chapter 11 Bankruptcy?
- Recover its assets
- Repay part of its debts and discharge whatever is left over
- Reject unprofitable contracts and leases
- Rescale and restructure operations to get back to profitability
When Should You File Chapter 11 Bankruptcy?
6 Steps When Filing For Bankruptcy
How does Chapter 11 Bankruptcy Work?
CHAPTER 11 BANKRUPTCY BASICS FOR THE MEDIA, PA; RISING SUN, MD & STATEN ISLAND, NY AREA
Prevent Collections On Your Business
LEARN MORE ABOUT THE PROTECTIONS OF THE AUTOMATIC STAY
One of the most immediate benefits of filing for Chapter 11 bankruptcy is the automatic stay, which is an injunction that automatically takes effect when a bankruptcy is filed. It prevents creditors from engaging in any type of collection activity while the Chapter 11 bankruptcy is pending. As a result, many businesses (and individuals) use bankruptcy as a tool to stop impending collection activities that could have devastating results, such as foreclosure or repossession of assets. While the automatic stay is in place, creditors may not engage in any type of collection activity – in addition to being barred from foreclosing on or repossessing assets, they may not make calls, send letters, initiate a lawsuit, or disconnect utilities. In many cases, the protections afforded by the automatic stay are what allow a business to continue operating while it works out a reorganization plan that will restore it to profitability.
TYPES OF DEBT IN CHAPTER 11 CASES IN MEDIA, PA; RISING SUN, MD & STATEN ISLAND, NY
The vast majority of Chapter 11 cases involve restructuring a variety of types of debt, including unsecured debt, secured debt, priority tax debt, and commercial leases. Again, the point of restructuring these debts is to protect business assets and continue operations while creating a plan to pay back creditors.
Get The Most Out Of Filing Chapter 11 Bankruptcy
WHAT TO LOOK FOR IN A CHAPTER 11 BANKRUPTCY ATTORNEY
Many business owners who are considering Chapter 11 have never been in this situation before and are uncertain as to how to even begin finding a lawyer. Here are some of the qualifications that you should consider when choosing an attorney to represent your business in a Chapter 11 case:
- Experience – Chapter 11 bankruptcy is a complicated matter and many practicing attorneys have made it through law school and passed the bar exam without learning the first thing about bankruptcy. As a result, it is important to not only look for an attorney who has been practicing law for some time but also one that has represented businesses in Chapter 11 proceedings in the past.
- A Track Record of Success – When choosing an attorney, it is important to consider whether your lawyer has successfully represented clients in a similar situation to yours. This can be difficult when choosing a bankruptcy attorney, because there are generally not clear winners and losers in a bankruptcy case. When choosing an attorney for a Chapter 11 business bankruptcy, it is advisable to look to his or her past clients’ outcomes after bankruptcy. This will give you a good idea as to how effectively the repayment plan was structured.
- Personal style – It is important to remember that you may be working with your Chapter 11 attorney for a number of years. As a result, it is critical to choose an attorney whose business and communication style suits your preferences. Do you like to discuss strategy or would you like to be advised as to how to proceed? What are your communication preferences? Answers to questions like these will help you choose a lawyer that will best suit your needs.
NEED MORE INFORMATION ABOUT A BUSINESS BANKRUPTCY?
Call Mike today for a free consultation to discuss your bankruptcy options.
If you are considering filing for Chapter 11 to allow you to keep operating your business, the first thing you should do is hire an attorney for debt reorganization. As one of the best debt reorganization attorneys, Michael Siddons has the skill and experience required to negotiate a reorganization plan with favorable terms and ensure that your legal rights are protected. Mike is licensed to practice law in the states of New Jersey, Pennsylvania, and Maryland and was named one of the “10 Best Bankruptcy Attorneys in Pennsylvania for Client Satisfaction” by the American Institute of Bankruptcy Attorneys in 2014. To schedule a consultation with Mike, call our office today at 610-255-7500 or send us an email through our online contact form.
FOR MORE INFORMATION ABOUT CHAPTER 11 BANKRUPTCY, CONTACT ONE OF OUR ATTORNEYS TODAY
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