Why Consider Chapter 11?
By now, some of you may be saying if the business continues to operate and pay its current obligations and may have to pay back creditor amounts, what’s the point of filing? During a Chapter 11 restructure, no creditor, even the IRS or state agencies are allowed to lien any part of your business for debts owned. In addition, because you are working with a cash collateral budget, most likely the restructure process will give you a chance to build on revenues and cover expenses with money left over at the end of each month.
If you do have money left over at the end of each month, while you can’t use it for large purchases, you don’t have to use it to pay off past due creditors either—that’s the purpose of a restructure—to help you gain a better financial position with need capital dollars and financial equity.
In the end, as long as you have stayed current on court fees, paid only current expenses, and kept your monthly reporting up-to-date, your attorney will have either settled with past due creditors, including lost lawsuits or contractural agreements you disagree with or amounts you owe will be drastically reduced and placed in a fair payment plan set by the court that will enable you to use your new financial equity in a fair manner—not making your broke again.
If you think business bankruptcy Chapter 11 restructuring is right for you, don’t be ashamed of the process—it could very well save your business and your reputation. It is no different than big businesses such as Chrysler or GM when they filed for restructure protection and often, if your past due debts are impossible to pay, but not enormous, you may be out of the restructure quickly—even less than a year.
Your most important step is finding the right law firm to represent you during the Chapter 11 restructure so make sure your research firms with your local Bar Association.
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