Running a successful business requires paying attention to daily operations while maintaining a focus on long-term growth. Sadly, even the most intelligent and experienced business owner may not be able to predict factors such as supply shortages, economic downturns and environmental catastrophes.
If your business has recently endured a period of hardship, your finances may be in the red. Before you give up and decide to close the company, you may want to look at whether a Chapter 11 bankruptcy filing might help you preserve the company. There are several noteworthy benefits that come with a Chapter 11 filing for a business.
A bankruptcy filing delays creditor actions
If a bank or other lender has threatened to repossess equipment or foreclose on your facilities, a bankruptcy filing can give you a little bit of time to sort things out before they do that.
The automatic stay that comes when you file temporarily halts all collection activity. That includes lawsuits and other legal proceedings like foreclosures. A few days or weeks of extra time may be what you need to put together a plan to protect your company.
Chapter 11 gives you an opportunity to restructure
When you file Chapter 11 bankruptcy, you may need to make some difficult decisions about your business’s future. You may have to lay off or terminate some staff, eliminate some products or services from your lineup and consider downsizing the scale of operations.
A Chapter 11 filing gives you the opportunity to negotiate with creditors and develop a workable plan for your company’s future. You will have to work with a court-appointed trustee and representatives from your creditors to find solutions that work for everyone as you try to regain financial control over your business. An experienced attorney can help you.