Corporations, partnerships and sole proprietorships beleaguered by debt may seek bankruptcy court protection from creditors by filing for Chapter 7 or Chapter 11 bankruptcy. Filing for Chapter 7 is essentially surrender, ending the business through liquidation while a Chapter 11 filing permits the enterprise to continue operating while it attempts to reorganize its debt. At Huntsman | Lofgran, PLLC, our legal team helps businesses determine if they may qualify for Chapter 11 bankruptcy and provides negotiation and other counsel throughout the debt reorganization process.
The idea behind Chapter 11 bankruptcy is that the value of the business is greater if the business is sold or reorganized as a going concern than if it’s dismantled by a Chapter 7 liquidation of its assets.
The Chapter 11 bankruptcy is similar to that of a Chapter 13 personal bankruptcy in that the filer commits to repay all or part of the debt cited by a repayment program that the bankruptcy trustee and creditors develop, and the bankruptcy court approves. If the business is a sole proprietorship or partnership, personal debt and assets may be involved, (and partners may subsequently need to file for personal bankruptcy themselves).
Protection under Chapter 11 bankruptcy can be considerable, and it includes:
There can be pitfalls as well, such as:
There is a host of regulations and circumstances that may make Chapter 11 bankruptcy the wrong choice for your business, so be sure to speak with one of our knowledgeable bankruptcy attorneys at Huntsman | Lofgran, PLLC before you make your move. Call us at 801-474-0031 today or contact us online to arrange for a free initial consultation. Put our knowledge and experience to work for you.