If your business is facing hard times, you may be inclined to shut it down, declare bankruptcy and give your creditors what you can. But bankruptcy can often be a way to save a business, particularly if the market’s starting to turn and you just need some time to get into the black. A Chapter 11 bankruptcy petition can do more than simply make your monthly payments more affordable. It can buy you that precious time without a lot of cash going out, where you can finally right the ship.
The Benefits of a Chapter 11 Bankruptcy Filing
When you seek to reorganize your business debt under Chapter 11, you’ll get the immediate and immense benefit of the automatic stay. The automatic stay prevents creditors from calling, writing or taking legal action to collect on any debt, other than through the bankruptcy process. You won’t have to deal with continual calls or threatening letters, and all legal proceedings will be suspended until your bankruptcy filing is complete.
In addition, once you file for Chapter 11 protection, you’ll have a certain amount of time to work out new payment arrangements with all of your creditors. Often, you can negotiate new arrangements that involve the waiving of fees and penalties, and work out payments that significantly reduce your monthly outflow.
You’ll usually be allowed to continue regular business operations while in Chapter 11, but you will have some restrictions on business activity without permission of the bankruptcy trustee or the court. For example, you may be prohibited from taking on new debt or buying or selling certain assets without the approval of the bankruptcy court.
It is never too early to consider these options. Chapter 11 is risky and expensive but may well be worth it. A high percentage of small businesses in Chapter 11 will fail, but with proper advance planning, the chances of success are much higher.
Contact Neuner & Ventura, LLP
At Neuner & Ventura, LLP, weprovide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.
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