Benefits of a Chapter 11 Bankruptcy
Reorganization bankruptcy
What is A Chapter 11 Bankruptcy?
A Chapter 11 bankruptcy is usually filed by a business although there are times when they are appropriate for an individual. It is a good idea to discuss the options available with a bankruptcy attorney in NJ to determine if Chapter 11 is the best option for a particular situation. Sometimes “business bankruptcy” is the term used for this proceeding. When filing a chapter 11 bankruptcy, the business owner can keep their business open and run normally while they are developing their reorganization plan. In some cases, it is beneficial to allow for liquidation too. The main purpose of a Chapter 11 is like other bankruptcy chapters in that the debtor is trying to get debts discharged. There are very few business owners who file for Chapter 11 and emerge with their business intact. It usually undergoes some very deep structural changes. In most of the cases, the bankruptcy will help a business owner develop a brand new entity even though it can still bear the same name as the one which declared bankruptcy. It is very likely that the newly formed business will have a different ownership structure as well as new management. But there are certainly some benefits that can be had by filing a Chapter 11 bankruptcy.
Stay in Business During The Bankruptcy
Filing A Chapter 11 Bankruptcy
A business or individual who faces difficult financial times has options for helping restructure their financial situation. However, unless there is a substantial amount of money involved, it is more advantageous for the business than the individual. But these types of decisions should be made with the counsel of a financial advisor or a bankruptcy attorney. One of the best benefits for the business owner who files for Chapter 11 bankruptcy is that they can continue with their normal business operations while working on a new business plan which helps them pay off their debts. Another benefit is that there are not any debts which can be considered as non-dischargeable and the business owner can structure the payments in such a way that the payments are greatly reduced. In some cases, the full amounts of debts are not required to be considered paid in full. Another advantage to filing Chapter 11 is that the courts issue an automatic judgment which disallows creditors to contact the business owner in any way.
Purpose of A Chapter 11 Bankruptcy
In today’s financial climate it is not unusual for a business to find themselves in a financially challenging situation. They can be in very serious need of a debt resolution plan to work out their debts. The Chapter 11 bankruptcy is sometimes called a reorganization bankruptcy as it will allow a business to continue their operations while protecting them from creditors. The court will in these cases offer oversight while the restructuring is being completed. They also set forth guidelines which help the business owner restructure their business and its finances. Filing the bankruptcy in this manner helps prevent the business from losing everything in the process. When a business chooses a Chapter 11 bankruptcy it allows them time to go back to the drawing table and restructure their business in such a way as to pay off their debts.
Why file A Chapter 11 bankruptcy?
When a business person files for a Chapter 11 they will be able to keep all of their possessions and assets. The business person has an allotted time to reorganize and redevelop their business plan. Once it has been completed the creditors committee has to approve it before it can become the new structure for the company. The business owner can choose how and when to make payments and how each of the debtors will be paid. This is regulated by the courts and if it happens that the business owner does not remain consistent in making payments as they were agreed upon then the case can be dismissed, or they may have to convert it to one of the other types of bankruptcies.