Florida business owners, like their counterparts across the country, have most likely come on difficult financial times. Their business might be suffering and it might be getting harder to stay open and keep paying people their wages. While business owners have a whole staff of people expecting them to make sound financial decisions, sometimes the best decision might be to recognize that the business is not working out in its current form and its best if everyone walks away from it. Chapter 11 bankruptcy might be one way businesses can do that.
Can the business keep operating during Chapter 11 bankruptcy?
Through Chapter 11 bankruptcy, companies can file for bankruptcy. This form is known as reorganization, since it restructures the debtor’s affairs, business debts and liabilities. What many don’t realize is that their business can keep operating during this time and also remain afloat. Corporations, businesses, partnerships and in limited instances, individuals can also file for Chapter 11 bankruptcy.
The debtor will retain possession of the business, unless there are allegations of fraud or gross incompetency. However, the some decisions may have to go through the court, such as selling assets, expanding businesses or terminating them, and beginning or ending rental agreements. Some kinds of loans are also impermissible.
What is a reorganization plan?
A reorganization plan can be one that proposes downsizing the business or renegotiating debs. This can help keep expenses down. Some plans may also include liquidating assets to pay off creditors. While the debtor has the first opportunity to propose a reorganization plan, courts do not have to accept it. Instead, they can enforce their own one.
Chapter 11 bankruptcy can be complex and with so much at stake, it might be beneficial for business owners to get some advice from someone familiar with the process. Consulting an experienced attorney might be one way to ensure Chapter 11 bankruptcy papers are filed properly.