Running a business is not a simple matter. In this changing economy and with voracious competition due to globalization, making a business successful can be a real challenge. Companies often face serious financial problems, virtually going bankrupt. In those moments a viable option that can be the great ally of a new beginning is to redirect the corporate economy through bankruptcy chapter 11.
This is a resource that is in the American Bankruptcy Act that allows companies to reorganize their assets. Besides, the company will be able through this procedure to successfully execute an amortization of its financial commitments.
One of the significant advantages of the reorganization process through this chapter is that although you are in bankruptcy, you will still maintain control over corporate assets. It is somewhat different from the private methods in which a bankruptcy trustee handles assets. After your filing, you will be able to operate the business. During this time you will be supervised by the court, under the figure of "Debtor in Possession" (DIP).
Who Can Apply For Chapter 11?
- Corporations: One of the advantages is that during the process the assets of the shareholders will not be at risk of liquidation. Only the assets of the company will be taken into account.
- Small Businesses: Any company that engages in business activities whose claims for creditors do not exceed $2,490.925 may be considered a small business. During your bankruptcy proceedings, the court may grant you special exemptions. For example, the court may order that a creditor committee not be created. They can also prevent the filing of a disclosure statement (speeding up the process). Finally, the court may extend the filing time from 120 to 180 days.
- People: These are special cases in which an individual has too large assets and is not qualified to apply for chapter 7 or 13. In these cases, unlike companies, personal assets are at risk of liquidation.
- Associations: These are commercial companies, in which the business assets remain separate from the personal ones. Even when this separation exists, the court may place these personal assets in liquidation, unless the partners file for bankruptcy protection.
Which are the Benefits of Chapter 11?
In addition to the fact that you can continue to operate your business while you pay your debts, these are some of the other benefits that this economic reconstruction option offers you:
- The automatic stay judgment prevents creditors from harassing you to pay debts. Even if that happens, you can take legal action against them.
- You are free to restructure secured debts. The usual procedure is to extend the total time, making the payments lower.
- In the case of unsecured debts, you can partially pay them.
Need Help From the Best?
If you are facing financial problems with your business and want the assistance from Kentucky's best team of specialist attorneys, you are in the right place. Let the OBryan Law Offices team assist you in having a successful bankruptcy chapter 11 process. Your new financial start is a call away. Contact us.
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