When Should You Start to Consider a Chapter 11 Bankruptcy?
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When Should You Start to Consider a Chapter 11 Bankruptcy?

On Behalf of | Aug 5, 2021 | Bankruptcy

Chapter 11 bankruptcy, a kind of business bankruptcy, is designed to help businesses restructure and reorganize their debts. During a Chapter 11 bankruptcy, you will usually stay in possession of your business and finances, being able to continue to operate so long as you have the approval of the court.

Not all people want to look into bankruptcy, but if your business is struggling with debt, it may be a good choice. How can you tell if Chapter 11 bankruptcy would be right for you? Here are three signs it’s time.

You’re Missing Payments on Your Debts

One of the first signs that you need to consider Chapter 11 bankruptcy is if your business isn’t bringing in enough income for you to pay your business debts. If your incoming funds are not enough to support your debts, don’t wait to talk to someone about the potential for reorganization. Reorganizing soon enough may help you avoid shutting down and avoid Chapter 7 liquidation.

You Can’t Pay Your Employees

If you have expanded and have many employees, you may find it difficult to pay them all if you don’t have enough money coming in. If you can’t pay your employees, you need to reassess the organization of your business and take steps to resolve the problem. With a Chapter 11 bankruptcy, you may be able to reorganize in a way that gets you the funds you need while letting go of any staff you don’t need.

You Want to Get a Fresh Start

Have you ever looked at your business and felt like you need a fresh start? Even if you’re breaking even, it may not be structured in a way that is beneficial to you. Consider Chapter 11 bankruptcy, so that you can renegotiate contracts and arrangements with lenders and vendors.

Ready to Consider Bankruptcy? Now May Be the Right Time

These are a few times when you may want to consider a Chapter 11 bankruptcy. It can be a beneficial way to keep your doors open while focusing on reducing your debt and liabilities to make your business more profitable.

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