Chapter 11 bankruptcy is a kind of bankruptcy that allows a business to reorganize its affairs. It can reorganize its debts and assets so that it can continue operating in the future.
It’s normal for businesses to file for Chapter 11 bankruptcies when they need time to restructure their debts. For example, a business that has not been profitable for the last several months and that is at risk of defaulting on loans may turn to an attorney for help with Chapter 11 bankruptcy to prevent having to close their doors.
During a Chapter 11 bankruptcy, companies don’t usually shut down. They remain open, may maintain their staff and could continue operating as usual. There may be changes in how they operate, such as eliminating some of their staff or reducing certain operations to save money, but the goal is to stay open.
If you’re a business owner considering a Chapter 11 bankruptcy, remember that it may be normal to lay off workers, to renegotiate contracts with third parties and to rearrange debt repayment plans, so that you can make your business profitable in the future. Although it may be frustrating to let go of some of your workers or to have to spend time renegotiating terms of arrangements with third-party distributors or providers, the end result may be that you can continue to keep your business running (and help it be profitable once again).
Your attorney can help you set up a Chapter 11 bankruptcy if you need help with your business’s finances. Get started soon, so you can start discussing ways to move forward instead of continuing to tread water or fall behind on your debts.