An individual who wracks up unmanageable amounts of debt is likely to feel stressed out and overwhelmed. Now imagine how a business owner, who spent years starting and growing a business that is now facing financial difficulties, must feel upon realizing that not only is his or her personal livelihood at stake, but so too are those of employees and their family members. With no viable plan to pay back and get out of debt, a business owner is likely to fear that he or she could essentially lose everything.
Small business owners who are struggling with debt problems have options and can benefit from seeking the advice and assistance of an attorney who handles debt resolution and Chapter 11 bankruptcy matters. In many cases, small businesses can remain viable if allowed a chance to prioritize, reorganize and devise a plan for future profitability.
Upon filing for Chapter 11 bankruptcy protection, creditors must cease all attempts to recover any outstanding debts. This provides a business owner the space and time necessary to devise a plan for the future without worrying about debt. Another major advantage of Chapter 11 is that a business owner is allowed to continue with normal business operations. This means that a business can remain competitive and even emerge stronger post bankruptcy. It also means that employees retain their jobs and continue to receive paychecks.
In an effort to reduce debt liability, a business owner is allowed to object to or negotiate debt amounts and terms with creditors. For example, a business owner who files for Chapter 11 may choose to renegotiate contracts and leases. Additionally, depending on the type and amount, some creditor debts may be discharged altogether thereby releasing a business owner of any repayment obligations.
Chapter 11 bankruptcy provides businesses and business owners with the opportunity to get out from under crushing amounts of debt and reorganize business operations with profitability being the end goal. While many business owners can benefit by taking advantage of the opportunities afforded via Chapter 11 bankruptcy, the actual process is complex and individuals who attempt to forego legal representation are likely to make mistakes that could jeopardize the entire process.
Source: FindLaw.com, "Chapter 11 Bankruptcy," July 29, 2015