The reorganization plan of Chapter 11 bankruptcy allows business owners to create a strategy for how they will repay debts over time and keep their business open.
Staying competitive in the world of business often requires anticipating trends and being ready to meet consumer demands if and when those trends arrive. This is a gamble, of course. Correctly predicting a trend in consumer behavior can really be profitable, while an incorrect prediction can be financially disastrous.
After careful consideration, a business owner might determine that filing Chapter 11 bankruptcy is the right path for them. It will allow them to keep running their business operations but help them relieve their debt as well.
In today’s world, no company is immune from the pressures of market competition, regardless of how long that company has been around. Even time-tested ideas like flower and gift delivery can prove to be unprofitable if the company encounters an unforeseen problem or makes an unsuccessful business decision.
Of all available forms of business bankruptcy, Chapter 11 is the only one that allows for restructuring of a jointly-owned business, LLC or corporation (Chapter 13 restructuring is only available for sole proprietorships). Although the Chapter 11 process can be difficult, it is an opportunity to revive a business that may still be viable despite unanticipated hardships.
The business world is full of adages that encourage risk-taking (“nothing ventured, nothing gained”) and seizing opportunity (“strike while the iron is hot”). But this advice, while well-intentioned, needs to be tempered by appropriate caution. Even when a business is a booming success and continued growth seems inevitable, fortunes can change quickly.
There are all kinds of expenses that can come up in connection to running a business. Some of these costs are needed to put a company in a strong position to compete and succeed. However, some are unnecessary and end up bringing little benefit to a company.
This spring, Congress reintroduced a bill that would provide small businesses with greater opportunities to benefit from Chapter 11 bankruptcy. The Small Business Reorganization Act (SBRA), if passed, will add a Subchapter V to the United States Bankruptcy Code. New provisions propose giving businesses with less than $2,566,050 in liabilities a more streamlined method of debt relief.
Too many people think of bankruptcy as the end of the road for a small business – but it doesn’t have to be. Filing for Chapter 11 reorganization bankruptcy allows you to restructure business debt, satisfy creditors and get your company back on track. If all goes well, the business survives and even comes out stronger than before.