A business can have good years and bad years. Some years, the company may earn a substantial profit and in other years the business may break even or suffer a loss. In many cases, a company may recover after a temporary loss of income or business because it has assets to sustain it during periods of loss. However, there are some situations in which a company needs assistance to continue operating. A Georgia Chapter 11 bankruptcy filing can help a struggling business reorganize its debts into a manageable plan that allows the business to remain open and operating while it recovers from a period of financial loss.
What Are The Chapters Of Bankruptcy?
There are several chapters of bankruptcy that individuals and businesses may file under when they seek bankruptcy relief. The “chapter” refers to the section of the Bankruptcy Code that governs the cases filed within that section of bankruptcy law. The chapters available under bankruptcy are:
- Chapter 7 — Liquidation bankruptcy
- Chapter 9 — Bankruptcy for municipalities
- Chapter 11 — Individual or business reorganization
- Chapter 12 — Fisherman or family farms
- Chapter 13 — Individual reorganization
- Chapter 15 — cross-border and ancillary cases
Choosing the correct chapter of bankruptcy for your business is essential. A Chapter 11 business bankruptcy can allow business owners to retain control of the company and continue business operations while resolving a debt problem.
WHAT CAN A GEORGIA CHAPTER 11 BANKRUPTCY CASE DO FOR A BUSINESS?
A Chapter 11 business bankruptcy filing can save a failing business. It can keep the doors open while holding creditors at bay for a short time to allow the company to propose a plan of reorganization. Much like a Chapter 13 case for an individual, a business bankruptcy under Chapter 11 gives a company the opportunity to restructure debts without requiring the company to involuntarily surrender property to a trustee or a creditor. The filing makes it possible for the company to keep the equipment it needs to continue operating.
Unlike some other chapters of bankruptcy, a Chapter 11 is more flexible to permit companies to propose a reorganization plan that gives the business the best chance of surviving and overcoming its problems with debt. For example, in a Chapter 11 plan of reorganization, a company may choose certain assets to surrender to creditors, lay off employees, liquidate assets, downsize, renegotiate debts, and rescind contracts. The company can propose to reduce the secured portion of the debt to the value of the collateral to save the company money. There are many benefits of Chapter 11 that can be utilized to prevent a business from being forced to close and liquidate assets.
IS A GEORGIA CHAPTER 11 BANKRUPTCY CASE THE BEST CHOICE FOR MY COMPANY?
Because the Bankruptcy Code has special provisions that allow a business to tailor the details of the reorganization plan to fit a specific business enterprise, this chapter of bankruptcy is often the only choice for a business that wishes to remain open even though it cannot pay all its debts. Furthermore, a Chapter 11 case allows for company growth so that the company can regain its profitability even during the Chapter 11 process.
However, a Chapter 11 case is an intricate process with requirements and rules that you will not find in other bankruptcy chapters. A Chapter 11 case requires the filing of numerous complex and detailed documents. In addition, creditors must vote on the proposed Chapter 11 plan of reorganization. A company may need to amend the plan several times as it negotiates with individual creditors before it can obtain an order approving the plan.
The requirements of a Chapter 11 case require an in-depth knowledge of this area of Bankruptcy Law. Therefore, you should not consider a Georgia Chapter 11 bankruptcy filing until after you consult with an experienced bankruptcy lawyer who routinely handles Chapter 11 cases.
FINDING EXPERIENCED HELP WITH A CHAPTER 11 BUSINESS BANKRUPTCY
A bankruptcy attorney can analyze your business to determine if you qualify for a Small Business Chapter 11 case filing, which is not as complex, costly, or time-consuming as a regular Chapter 11 case. In addition, there may be situations in which business owners may benefit more from filing under Chapter 7 or Chapter 13.
Before leaping into a Chapter 11 business bankruptcy that may not give you the results you are seeking, you should discuss all your options for resolving business debt with our Georgia Chapter 11 bankruptcy attorney. Competent and experienced legal counsel is the most important element you should have on your side when deciding whether a Chapter 11 bankruptcy filing is best for your company. Contact us today for a free consultation with a skilled Georgia bankruptcy attorney.