If your business’s finances are getting worse by the day, revenues are decreasing and debts are piling up, you may need to start looking for alternatives to get financial relief to recover from this crisis. One legal option that can help you get a fresh financial start for your business is bankruptcy. Believe it or not, bankruptcy is not an entirely negative process. In fact, it may be exactly what you need to find success down the road.
Now, if you are thinking about filing for bankruptcy, you may be wondering which type of bankruptcy is right for you. The short answer is that in most cases, even if you are a small business owner, you may want to opt for the most common bankruptcy chapters, Chapter 7 bankruptcy, and Chapter 13 bankruptcy. However, if your debts or those of your business exceed the limits set by these bankruptcy chapters, you may need to turn to Chapter 11 bankruptcy to get the financial relief you are looking for.
Not sure if bankruptcy is for you? Talk to a local attorney
If you want to know if bankruptcy is the best option to become debt-free or to get rid of most of your business debts, you may want to talk to a Los Angeles Chapter 11 bankruptcy attorney. In this city, you can find many experienced attorneys with the knowledge and dedication necessary to increase the chances of success of your filing, such as KT Bankruptcy Lawyer. This law firm has helped dozens of California businesses get the financial relief they need to rebuild their finances.
Most Los Angeles Chapter 11 bankruptcy attorneys offer completely free consultations, so don’t hesitate to contact them to find the ideal lawyer for your case.
What is chapter 11 bankruptcy?
Chapter 11 bankruptcy involves the reorganization of all facets of an individual’s or business’ finances, including its assets, debts, contracts, etc. Therefore, it is popularly known as “reorganization bankruptcy” or “business bankruptcy”.
In this type of bankruptcy, the debtor will provide a plan for the repayment of the accumulated debts, along with the financial restructuring measures that will be taken to achieve such repayment. The bankruptcy court must approve the plan before it can be implemented.
Chapter 11 is the most complex bankruptcy process, and usually the most expensive of all. As such, you should carefully analyze your financial situation, or that of your business, before proceeding with this type of filing. A bankruptcy attorney near you may be able to help you with that process.
How does Chapter 11 Bankruptcy work?
To initiate a Chapter 11 bankruptcy case, a petition must be filed in the state where the business was incorporated or is currently located. This petition may come from the debtor or a creditor.
Upon the filing of the case, the debtor becomes a debtor-in-possession and shares most of the responsibilities that a bankruptcy trustee would have.
After the filing of all required documents and the meeting of creditors, the Chapter 11 bankruptcy process will officially begin.
The first thing the debtor-in-possession will have to do is provide a disclosure statement describing the debtor’s financial structure and how the debtor’s business operates in detail.
Next, the debtor will propose to the creditors a financial reorganization plan that will allow the debtor to pay off its accumulated debts. The creditors then vote to approve the plan. However, before the repayment plan can be implemented, it must be approved by a bankruptcy judge.
After the repayment plan is completed, the debtor will officially receive a debt discharge and will have the opportunity to rebuild his or her business anew.
Your business can bounce back after your bankruptcy
You may think that bankruptcy spells the end of your business, but you may be wrong. Many businesses that are successful today also went through financial difficulties in the past and had to resort to bankruptcy to stay afloat. Some notable examples are the cases of Marvel Entertainment, General Motors, Texaco, and Chrysler. If you play your cards right, your business could become the next big success story after bankruptcy.
Learn more about Business Bankruptcy on Legal Facts
Business bankruptcy tends to be an extremely complicated process. But that doesn’t mean you have to sink hundreds of hours into understanding it. At Legalfacts.org you can find information on this and many other legal issues in easy-to-understand articles that you can read in a matter of minutes. Plus, if you want to talk to a bankruptcy lawyer near you, you can reach one through their vast network of attorneys throughout the United States.
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Barry Lachey is a Professional Editor at Zobuz. Previously He has also worked for Moxly Sports and Network Resources “Joe Joe.” he is a graduate of the Kings College at the University of Thames Valley London. You can reach Barry via email or by phone.