As a business owner goes through the steps of establishing his or her business and growing it, the individual often turns to an attorney in order to make sure he or she is following all the laws related to that business. While one hopes to have their business operating smoothly from that point on, many businesses reach bumps in the road for a wide variety of reasons.
For some New York businesses, that bump may be more than they can handle alone. In this case, they might work with their attorney to file for Chapter 11 bankruptcy protection. Once the petition is filed, it begins what is called an automatic stay of all collections. That means creditors who are seeking debts from the company may no longer pursue collections of any unpaid debt unless the court decides to make a modification of that stay.
This part of the process gives a business owner some time to put together a reorganization plan in order to repay the creditors involved. It is definitely a welcomed part of the process because it takes a lot of pressure off the business owner and gives him or her time to find a strategy that can benefit the company in the long run. The company can continue to stay in business throughout this process.
With the supervision of the court, a proper repayment plan can hopefully be reached and the company can agree to repay debts at much lower amounts. After the plan is set, the company will file regular reports in order to keep the court informed of its progress.