When the economy weakens or your industry isn’t doing as well as it has in the past, it can put a serious strain on your business. Fortunately, there are methods to overcome issues with your business’s finances and ways to get your business back on track.
One of the methods to overcome financial challenges caused by excessive debt or unexpected expenses is Chapter 11 bankruptcy. Chapter 11 bankruptcy gives you an opportunity to request relief from your creditors and to restructure your debts to allow your business to continue running. With Chapter 11 bankruptcy, corporate entities can negotiate a structured repayment plan that is more in line with their current financial options.
This process is overseen by a trustee. This trustee is appointed by the regional federal bankruptcy court.
Can a small business seek relief through Chapter 11 bankruptcy?
If you have a business, like an LLC or corporation, you can use Chapter 11 bankruptcy to restructure your business’s debts. You may file a voluntary petition.
What do you need to include in your Chapter 11 bankruptcy petition?
With your petition, you should include:
- A statement of your business’s financial affairs
- A schedule of any unexpired leases and executory contracts
- A schedule with your current income and expenditures
- A list of your liabilities
- A list of assets
There is also a fee for this form of bankruptcy. The court charges a $1,167 case filing fee as well as a miscellaneous administrative fee of $571. These fees usually must be paid to start the case. If they are not paid, then it’s possible that the court could dismiss your case.
Can your business stay open with a Chapter 11 bankruptcy?
Yes, usually. A Chapter 11 bankruptcy’s goal is to help you restructure your business. You may need to cut back on your total number of employees or downsize your business based on the restructuring you do, but most businesses do keep their doors open throughout the process. This allows them to continue operating, bringing in an income to help resolve debts with those they owe.
If your business is struggling, don’t wait to consider this option. Chapter 11 bankruptcy may be the right choice for you.