Suppose you own or operate a business and find that it is collapsing under the weight of its financial obligations. In that case, you may consider Chapter 11 bankruptcy to help your business deal with debt.
One significant benefit of Chapter 11 bankruptcy is that the business will continue to operate and will come out the other side of bankruptcy in a much better financial position, maybe, as a more profitable and financially stable venture.
Chapter 11 bankruptcy also allows a business to resolve all of its liabilities and debts at once. With chapter 11, a business can often secure more favorable terms by negotiating with creditors in the bankruptcy court rather than negotiating with each creditor.
Moreover, a bankruptcy court’s decisions, including the reorganization plan’s approval, are binding on all of a debtor business’s creditors even if a creditor disagrees with or does not like the decision. However, chapter 11 bankruptcy procedure requires a lot of work and legal knowledge, and you may need the assistance of an attorney.
If you are looking for a Chapter 11 Bankruptcy Lawyer in California, Financial Relief Legal Advocates, Inc., and its attorney, John Bauer, will be happy to help you with necessary guidance.
If you own or operate a business struggling with financial problems that seem impossible, you should understand the benefits of Chapter 11 bankruptcy. Below are four major benefits of chapter 11 if you are considering it:
- Keeping business activities running during the bankruptcy process
Unlike Chapter 7, which results in the shut-down of a business’s operations and the liquidation of its assets to generate cash to pay off the business’s creditors, a business in Chapter 11 bankruptcy will continue running, albeit with court oversight for a while. When you have worked hard to build a business, you indeed don’t want to close it down due to financial liabilities.
Chapter 11 bankruptcy allows you to continue your business operations during the bankruptcy process, so you don’t lose your business and goodwill and customer base. Your Chapter 11 Bankruptcy Lawyer will help you prepare a plan with maximum chances of approval, and your business can stay open based on this.
- Automatic stay of all creditor actions
Among the most significant benefits of bankruptcy includes the automatic stay of creditor actions to collect a debt, including contacting your business to demand payment of a debt, seizing secured assets, or filing lawsuits to obtain money judgments for unpaid debts. It would be great if you have a Chapter 11 Bankruptcy Lawyer by your side to guide you through the circumstances.
The automatic bankruptcy stay enjoins all repossessions, foreclosures, lawsuits, liens, levies, and other debt-collection activities. Suppose a creditor continues debt collection activities after your business has filed for bankruptcy without first obtaining relief from the bankruptcy court’s automatic stay. In that case, any actions they take can be voided by the bankruptcy court, and the creditors could face fines and penalties.
- Emergency relief for operations
Within a few days of a Chapter 11 bankruptcy filing, the bankruptcy court will schedule an expedited hearing to hear emergency motions relating to the business and its bankruptcy. This hearing represents an opportunity for the business to ask the court for the authority to undertake certain actions to continue the normal course of the business’s operations. For instance, continuing to pay wages and benefits to employees, filing and paying taxes, or meeting certain contractual obligations like rent, insurance premiums, or vendor invoices.
A company in Chapter 11 bankruptcy can obtain emergency relief to continue regular operations, giving employees, vendors, and customers’ peace of mind that the bankruptcy will not severely disrupt the business’s operations. It is especially important for small business owners who operate on a month-by-month basis.
- Possibility of obtaining loan at favorable rates
In addition to obtaining emergency authorization to continue regular business operations like paying employees or taxes, a business can seek emergency authorization for financing to help fund the business’s regular, ongoing expenses like payroll or supplies.
As a result, businesses may obtain badly needed financing to continue regular operations at more favorable rates than they would have immediately before bankruptcy.
Now that you know all the benefits of chapter 11 bankruptcy, you may want to consider it. To hire an experienced and skilled Chapter 11 Bankruptcy Lawyer in California, contact Financial Relief Legal Advocates, Inc., and its attorney, John Bauer.
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