Chapter 11
Even a very successful business can become overextended. Your business may be well managed, have good cash flow and a great business model, yet one impatient investor or vendor or stubborn landlord can threaten the health of your business. If your business is unable to keep up with payments or is taking on more debt, Chapter 11 may be a good option for you. Filing for Chapter 11 bankruptcy protection may be the only way of salvaging your business.
Chapter 11 business bankruptcy provides business owners with the breathing room they need to redistribute debts, reject or modify leases and contracts, and negotiate with creditors. Chapter 11 allows you to:
• Immediately stop foreclosure, all lawsuits, and eviction
• Give you business breathing room to negotiate with creditors
• Continue to run your business as you did before the Chapter 11
• Modify your business plans and give your business a fresh start
Chapter 11 reorganization allows a business to repay creditors over time, rather than cease operations entirely. In addition to protecting the interests of the creditors, Chapter 11 also protects the jobs of employees. As under other chapters of the Bankruptcy Code, the Automatic Stay against creditor actions instantly goes into effect when a Chapter 11 bankruptcy is filed. While the stay is in place, we will negotiate with your creditors and lenders and proactively attempt to resolve your differences. The business is usually allowed to continue day-to-day operations during the restructure, though a trustee might take over if fraud or gross mismanagement was established. The bankruptcy court must approve all significant business decisions.
Chapter 11 bankruptcy is not only available to every kind of business, but also to certain individuals with substantial debts and assets. In some cases, Chapter 7 and Chapter 13 are not available to individual consumer debtors. In those cases, an individual Chapter 11 debt restructuring may be a good option. In the case of individuals, a Chapter 11 is very similar to Chapter 13 bankruptcy. Funding of the Chapter 11 Plan can come from the debtor’s future earnings, and in general the debtor must commit disposable income over five years unless the plan pays all claims in full over a shorter period of time.
The Chapter 11 bankruptcy process is very complex, and declaring Chapter 11 can be a difficult decision. The experienced attorneys at Lee Legal can answer your questions and provide you with qualified bankruptcy advice and guidance.
If have questions about Chapter 11 or simply want to stay in business, call a Virginia Chapter 11 attorney at (703) 879-2870 or a Washington, D.C. Chapter 11 attorney at (202) 448-5136. Every client of Lee Legal gets a free consultation.