Understanding Chapter 11: Know Your Options
You did everything you were supposed to do. You created a detailed business plan, then consulted with experts to make sure you had everything covered. Unfortunately, even the best-planned businesses can meet with unforeseen circumstances, and when this happens, how you respond can have a great impact on your future. In fact, if you catch it early enough, you may be able to stay open under Chapter 11 bankruptcy.
What Is Chapter 11?
Unlike the more commonly pursued Chapter 7 bankruptcy, Chapter 11 is for business owners who believe that a restructuring of their operation can actually work to resolve their debt situation. Though the actual process can be complex, the basics include:
- Reorganization: Part of the Chapter 11 process is putting a clear and concise reorganization plan into action. You must have this plan detailed and submitted to the proper authority if you hope to take this course of action.
- Court-Appointed Trustee: The other major consideration of Chapter 11 is that your business will be under the scrutiny of a court-appointed trustee. This will continued until you are able to pay off your debts.
With both of these considered, many business owners wonder if they will be able to stay afloat after declaring Chapter 11.
Can You Recover?
Since Chapter 11 is somewhat unique when it comes to business bankruptcy options, it is very possible for you to recover. The important factor in this situation rests on how well you can change and adapt your business practices. Keep in mind that your operation will be under increased scrutiny, so it is important that you can see yourself operating under these changed conditions. If you can, the road to recovery may still be difficult, but it is definitely possible.
No one opens a business expecting to declare bankruptcy, but in certain situations it can be a useful tool that helps you stay afloat. A business attorney can alert you to choices you didn’t know you had and help to ensure that your future endeavors meet with greater success. When you find that your family business is faltering and need help deciding if Chapter 11 is right for you, contact Jeffrey Cymrot of Sassoon & Cymrot for individual guidance and consultation.