When a business is having difficulty meeting its obligations financially, the owner may choose to close the business. This is considered a Chapter 7 bankruptcy. However, there are other business owners who want their places of business to remain open. They choose a bankruptcy filing that will allow them to reorganize the debt instead. This is known as a Chapter 11 bankruptcy. Chapter 11 bankruptcy is more complex than Chapter 7. Business owners should consult with a Chapter 11 bankruptcy attorney so they can better understand all of the complexities associated with the filing.
A Chapter 11 Bankruptcy Attorney Can Help the Business Decide If Bankruptcy Is the Best Option for the Business
A business owner should hire a bankruptcy attorney that is knowledgeable about Chapter 11 bankruptcy. Business owners should also only file after the lawyer has determined that bankruptcy is the best option to take. The business owner should thoroughly detail the company’s income, debts and assets with the lawyer.
The business owner’s plans for restructuring the business will be important to the lawyer. After receiving the necessary information, the Chapter 11 bankruptcy attorney will either agree that filing is the best option for the business, or the attorney will explain why filing is not a good choice for the business.
All Debt Must Be Categorized
Another reason why it is a good idea to consult with an attorney before filing Chapter 11 is the business owner must not only classify all of the debts that are related to the business, an approved reorganization plan must also be in place. Usually, a reorganization plan cannot last longer than 5 years. After the company’s creditor’s accept the reorganization, the bankruptcy court can approve it.Many times experience bankruptcy attorneys negotiate to have a reorganization plan approved.
There are many times when a bankruptcy court will appoint someone to oversee the company’s reorganization. This person will also ensure that the company remains in compliance with the plan. However, a Chapter 11 bankruptcy attorney will work with the trustee to ensure that the trustee is not disrupting the interests of the business.