Florida Chapter 11 Bankruptcy: How to Avoid Filing for Chapter 11 Bankruptcy in Florida

Florida Chapter 11 Bankruptcy: If you are a small Florida business that wants an alternative to filing for Chapter 11 bankruptcy - please visit our website at: http://www.Business-Bankruptcy.com or call us toll-free at 866.876.5938.

The consultation is cost free, completely confidential and there is no obligation to use our services. http://www.youtube.com/watch?v=02CYIexKreU

Contemplating Chapter 11 Business Bankruptcy - Understanding When Is The Perfect Moment

Chapter 11 business bankruptcy is also referred to as business reorganization. It consists of filing a reorganization plan (along with specified financial documents) with a bankruptcy court. The court calls for a meeting of all the creditors who need to vote on and accept the reorganization plan by a 3/4th majority. The reorganization plan is carried out by the business, and once the bankruptcy ends, the business becomes free from debt.

Chapter 11 Business Bankruptcy Warning Signs:

- When the money that you have withheld for taxes is already being used. That money needs to be paid to government, however, if you already use it for business, it signifies that you are cash-strapped.

- Whenever you keep stretching payments to vendors for a long period of time, not able to pay vendors punctually, or when you are already anxious for credit and keep on switching vendors.

- When serious instances that could affect the business happen such as a natural disaster, death of a partner, or embezzlement, and the like.

- Inability to repay secured debt installments on time or unable to repay them anymore.

- When your business has one or two customers and they declared business bankruptcy.

Business owners tend to wait for better times and expect their creditors to listen to them, which is in fact one of the biggest mistakes they could make. Creditors want repayment of debts and will do anything to get their money back. As soon as the warning signs show up, a business owner should appoint a Chapter 11 business bankruptcy lawyer.

A business can be assisted in exploring other possible options aside from bankruptcy by hiring a lawyer. For example, the lawyer would take a look and analyze the situation, then make suggestions such as a debt-for-equity swap or a debt restructuring exercise. If an attorney is not hired by the business owner, then he is surely digging a much deeper hole to bury himself in.

There is no simple business bankruptcy. Child support, taxes, alimony, etc, which are classified as priority debts would have to be paid, and if the business owner's personal property has to be sold just to repay these, then it has to be done. When it comes to priority debts, the law does not take pity. So if priority debts are the cause why a business is struggling, then a Chapter 11 business bankruptcy is not the option but a Chapter 7 bankruptcy.

Once priority debts are met, secured creditors come next, followed by semi-secured creditors and eventually unsecured creditors. In a Chapter 11 business bankruptcy, majority of these creditors ought to agree with the reorganization plan. Once the plan is agreed upon, the business owner must carry it out to perfection. If he does not, the Chapter 11 process fails and creditors can take their own legal steps to get back their money.

Smaller sized business owners seldom consider bankruptcy except when there are serious pressures. If your company has fallen behind with creditors and you are thinking about business bankruptcy, there are other solutions like business debt consolidation or debt management. Look at all options before filing for different types of business bankruptcy.

Business Bankruptcy - Frequently Asked Questions

Do you happen to be a small business owner being strangled by mounting debts and limited cash flow? Are you no longer able to repay debts, including priority, secured and other types of debts? Have you come to a point that you are using the money from withheld taxes for business? If so, here are some business bankruptcy FAQ's that can help you understand what’s involved:

1. What are the different types of business bankruptcies?

Sole proprietorships, partnerships, LLCs and corporations can file for Chapter 7 or Chapter 11 bankruptcy. Chapter 7 is liquidation and it involves selling the business’s non-exempt assets and repaying creditors with the proceeds. The business ceases to exist after the bankruptcy process is complete. Chapter 11 is business reorganization. It gives a business more time to repay its debts. Businesses that see no point in continuing operations may seek protection under Chapter 7, while viable businesses can opt for Chapter 11 business bankruptcy.

2. What are the challenges of a business bankruptcy filing?

Sole proprietors have to file for bankruptcy in their individual name because the sole proprietorship business is an extension of the business owner. Partners run the risk of being sued by the case trustee in a Chapter 7 business bankruptcy in case the assets of the partnership firm are insufficient to repay its debts.

3. Chapter 7 or Chapter 11 business bankruptcy - which option should a business choose?

The business owner must understand that by reorganizing his business by seeking protection under Chapter 11, he cannot expect better market conditions. He must opt for this type of bankruptcy filing only when he is operating a business that can generate profits in the future given its current strengths. Chapter 11 business bankruptcy will help him free up some cash that can be used to run the day-to-day business operations. It will also help him reject expensive leases and prevent creditors from taking over his business assets.

4. What happens when a Chapter 11 bankruptcy process fails?

The court will convert it to a Chapter 22 bankruptcy, which is similar to a Chapter 7 bankruptcy. The business assets are sold and the business ceases to exist after the Chapter 22 bankruptcy process is complete.

5. What should the business owners pay attention to?

Before opting for Chapter 11 bankruptcy, the business owner must calculate his priority debts. If he cannot repay these debts, Chapter 11 business bankruptcy cannot help him. He must also check the extent of his secured debt. No secured creditor will reduce his debt because he can always take possession of the asset much to the dismay of the business owner. The business owner must make a list of his creditors and understand their classification and priority before choosing a business bankruptcy category.

These are some of the critical factors that all business owners must pay attention to before seeking protection under Chapter 7 or Chapter 11 business bankruptcy.

Assignment -- An Alternative To Business Bankruptcy

An Assignment for benefit of Creditors can be considered by business owners who don’t want to seek protection under a Chapter 11 business bankruptcy. This option should only be taken into consideration when the business is no longer sustainable due to an unprofitable product line and/or a mountain of debt. Chapter 7 and Chapter 11 business bankruptcy differ from an assignment for benefit of creditors. In fact, it is a substitute for Chapter 7 bankruptcy and business owners who need reorganization, not closure, must not consider it. Businesses that need restructuring must opt for Chapter 11 bankruptcy instead.

State laws govern an Assignment for Benefit of Creditors, therefore, it could vary from one state to another. It is supervised by state courts. In an Assignment, an assignee is empowered by the state court to take control of the assets of the business. The assignee is usually chosen by the business owners and the creditors and it is crucial that the assignee is reputed and experienced. You need to take note that in the case of a business bankruptcy, it is the court that chooses the case trustee. The business assets must be assigned by the business owner to an assignment estate.

A fiduciary role is played by the assignee towards the creditors, and he makes it a point to be able to sell the assets of the business at the maximum price. After he sells the assets, he pays the creditors, deducts fees and costs, and returns the balance to the business owner.

All other processes in an Assignment move like they do in a Chapter 7 business bankruptcy. A list of all creditors are filed by the business owner. Creditors are then notified by the assignee of the Assignment, and would set a date wherein creditors must be able to lodge their claim. The business becomes hollow the moment that the assets are transferred to the assignment estate. Even if a case is filed against the business, the creditor wouldn’t get anything.

A business owner must choose Assignment over business bankruptcy when the market price of all the business assets is inadequate to cover the debts. Assignment is less formal than a business bankruptcy process and moves much faster. Creditors cannot object to any sale made by the assignee. However, until the other party gives consent, an assignee could not force transfer contracts and leases. In a chapter 7 or Chapter 11 business bankruptcy, no such consent is required. Therefore, business owners with franchisees must not consider an Assignment, but a bankruptcy.

Filing For Business Bankruptcy Can Be A Daunting Task

Business bankruptcy can present itself as an easy way out for businesses that are enormously weighed down by financial obligations, but business bankruptcy isn't as simple as it might appear. You have got to assess whether your business has a good future or not. If you think that your company does not have any future, then you may choose to file for bankruptcy under Chapter 7, which will assist you in liquidating the company. However, if you can see some light at the tunnel's end, you may prefer to file for business bankruptcy under Chapter 11, which will help reorganize the company. Prior to filing a bankruptcy, consider and prepare for the following:

1. You need to submit your fiscal reports along with your business bankruptcy petition. Therefore, it is a good idea to keep tax records, financial statements, and record of agreements and contingent liabilities ready. The list of agreements should also include details of contracts that have been gotten into but not yet performed.

2. The legal counsel plays an important role in a Chapter 11 business bankruptcy and it's crucial to work with a reputed attorney who is specifically experienced in representing debtor-clients filing a petition for Chapter 11 business bankruptcy. Working with a lawyer who is an expert at representing creditors may not work. Working with an attorney who specializes in Chapter 7 petitions also may not be ideal. Hence, it is recommended that you choose a lawyer with care. Chapter 11 business bankruptcy is awfully specialized and consumes a lot of time and entails skillful negotiation with creditors. Only an expert and Chapter 11 savvy lawyer can certainly deal with such tasks.

3. Are you a farmer who’s suffering from debt problems? If your answer is yes, then it is highly recommended that you file for bankruptcy under Chapter 12. Do you earn a salary or a sole proprietor? If yes, consider Chapter 13 bankruptcy, which is more popularly known as wage earner’s bankruptcy. These bankruptcies are simpler and easier compared to a  Chapter 11.

4. You must always be truthful with your lawyer. Disclose all material and immaterial money affairs and situations which pulled you into the debt in the first place. These details will assist your case. Reveal your priority debts like support for child, spousal support, employee benefits, taxes due, etc. Talk about your creditors as well and categorize them into semi-secured, fully secured, unsecured, financial obligations from family members or subsidiary companies, etc.

5. If you’ve filed a petition for bankruptcy based on Chapter 11, the bankruptcy court will require you to operate as the case trustee (barring a variety of fraud cases) and function as a debtor in possession. A panel of creditors will be appointed and you will be required to put forward a reorganization plan to the bankruptcy court. The panel of creditors will then vote on your reorganization plan and if it is accepted, the court will affirm it. Once the reorganization plan is agreed upon, you must accomplish it as per its stipulations. Even moderate deviations from the plan may be viewed as a breach of agreement, and if this happens, the bankruptcy proceeding can fail.

Filing a business bankruptcy may appear simple, but is more complicated than you could ever imagine. Get hold of a lawyer who is an authority in your kind of bankruptcy before making your first move. Best of luck.

A Business Bankruptcy Petition Should Be Prepared Carefully

Business bankruptcy may appear to be an easy way out for businesses that are heavily weighed down by debt, but bankruptcy is not as simple as it may seem. You must determine whether your business has a future or not. If your business does not have any future, then you may opt to file for bankruptcy under Chapter 7, which will help liquidate the business. However, if you can see some light at the end of the tunnel, you may prefer to file for bankruptcy under Chapter 11, which will help reorganize the business. Consider contemplating on and preparing the following before you file for business bankruptcy:

1. Keep your financial statements, tax records, and a list of contracts (executed and under execution) ready. These have to be filed along with the petition.

2. When you are planning to file for business bankruptcy, you need to have an attorney who is considered as an expert on the type of bankruptcy that you would be filing for. For example, if you are looking for protection under Chapter 11, it’s best not to work with an attorney who specializes in Chapter 7 bankruptcies. This is because under Chapter 11 bankruptcy, you must adeptly present your case to creditors and an attorney who specializes in Chapter 7 bankruptcy may not be good at it. Chapter 7 bankruptcy on the other hand, is very simple and blunt, your business must be liquidated and so the court will help you liquidate it. Reorganization under Chapter 11 bankruptcy would require discussions between you and your creditors, which would be more complex as compared to liquidation.

3. If you’re a farmer, you can file for protection under Chapter 12 and if you’re a sole proprietor and a wage earner, you can prefer filing business bankruptcy under Chapter 13, which is known as wage earners’ bankruptcy.

4. It is essential that you will be honest with your lawyer, and inform him about the littlest financial detail that will support the bankruptcy case. Let him know about those things that are classified as priority debts which consist of employee benefits, child support, alimony, etc. Also, talk about the number and nature of creditors for example, fully secured creditors, partially secured creditors, unsecured creditors, etc.

5. If you would be going for a Chapter 11 bankruptcy, you will be obligated by the court to be the case trustee (except of course in cases of fraud), and you will then become a debtor in possession. A committee of creditors will be designated and you will be required to submit a reorganization plan to the court. If the committee of creditors approves of the reorganization plan you presented, then the court will give its affirmation. If you have opted for filing business bankruptcy under Chapter 7, you will have to provide a list of your non-exempt assets to the court, which will then dispose them and divide the earnings among your creditors in order of their priority.

Filing a business bankruptcy may appear simple, but is more complex than you can ever imagine. Get hold of a lawyer who specializes in your type of bankruptcy before making a move. Good luck.

Small businesses very rarely think about bankruptcy unless serious difficulties exist. If your organization has fallen behind with creditors and you are thinking about chapter 11 bankruptcy, there are other choices including business debt consolidation or debt management. Consider all possible choices before declaring business bankruptcy.

Don’t Be Daunted By Those Business Bankruptcy Facts And Figures

The main reason most businesses file for a bankruptcy is because they either need more time to pay their debts or they desire to close up shop for a variety of reasons (unprofitable products, impossible-to-repay debt). Businesses hire bankruptcy attorneys to take charge of the bankruptcy process, which could fall either under Chapter 7 or Chapter 11. Chapter 7 denotes liquidation, while Chapter 11 denotes reorganization. When the entire business bankruptcy process is through, the business becomes free of debts. Here are a few facts that you should know about business bankruptcy:

1. There are debts that fall under priority debts. You cannot just avoid paying these debts or pay them in parts. The business owners are personally liable for debts like taxes, alimony, child support, student loans, court fines or penalties, criminal penalties imposed by the law, debts on account of injuries caused to others while driving under the influence of alcohol or drugs. The best business bankruptcy lawyers cannot help you with such priority debts.

2. The small business can only seek protection from debts that arose before the business filed its bankruptcy petition. Those debts that were obtained after the date of the filing of the bankruptcy petition could not be covered by the bankruptcy protection laws.

3. Clients are advised by business bankruptcy attorneys to list every debt incurred according to their schedule. If a debt is not listed, it cannot be discharged by the bankruptcy process.

4. If it is discovered that the business owner received any asset, including money, by fraud, then the debt will not be discharged by the court.

5. The court can deny the debt discharge in the event that it discovers an act of dishonesty by the business owner. Example of dishonesty could be lying, falsifying records, destroying property or records, destroying assets, disobeying court orders, etc.

6. Business bankruptcy lawyers can only help obtain a Chapter 7 discharge once in 8 years.

7. When the court discharges debts that are secured by an asset, like lien on an office building, it does not necessarily mean that the debt has to be paid in cash. The financial institution that holds the lien can take possession of the property and then sell it.

8. There are instances when the debtor may like to continue paying a debt even after the court has already discharged it. For example, if a business owner has obtained a loan for the purchase of a car and this loan has been discharged by the court, then the business owner can enter into a “Reaffirmation Agreement” with the lender and continue paying his debt (mainly because he needs the asset. The court supervises this type of agreement.

These are a number of details you have to be aware of before contacting or choosing from the finest business bankruptcy attorneys.

Before Seeking Bankruptcy Protection - Consider Different Bankruptcy Options

Before, the topic of bankruptcy was a touchy one. However, as time flies, people became more aware of what bankruptcy means, especially Chapter 11, which pertains to reorganization of the business. When a business finds it difficult to meet its financial obligations, a bankruptcy is almost certainly to follow. The required interest for the loans that the business needs to pay usually eats up the company’s revenues, thereby leaving the company financially distressed.

While there may be various business bankruptcy options available for a company, it is still important for a business to weigh these options first, before deciding on one. There is also a need for a bankruptcy attorney to be appointed by the company, one who is aware of the bankrupt laws that can be applied. In fact, bankruptcy lawyers can present the company with other feasible options, and not just bankruptcy.

The following are the different business bankruptcy options that are available for financially constrained businesses:

1. Chapter 7 - Liquidation. If the business does not see any hope in the future because of an unprofitable product line or lack of assets or impossible debt, then it must file for protection under Chapter 7. Chapter 7 is ideal for sole proprietors and small businesses, where the name of the business is directly connected to the name of the owner or owners. In this type of bankruptcy, business assets are sold and the proceeds from the sale are used to compensate creditors. Once the proceedings are over, the company would not exist anymore.

2. Chapter 11 - Reorganization. This is opted for by companies with potentials but are hounded by debts. This allows a company to reorganize the structure and the manner by which it performs operations, hence giving more time to the company to pay up its debt. The company needs to submit a reorganization plan together with its petition for bankruptcy, which must be approved by its creditors. If creditors approve the reorganization plan, then the company must comply with the terms in the plan. When the creditors are paid and the plan has been executed fully, then the debts of the company are eliminated.

3. Chapter 13 - Wage Earner Plan. It is referred to as wage earner's bankruptcy, and a sole proprietor who has mixed up his personal assets in his business, so he can gradually repay his debts from his wages. This Chapter helps protect the personal assets of sole proprietors.

4. Chapter12 - Family Fishermen Bankruptcy. Farmers and fishermen can seek protection from their creditors under Chapter 12 bankruptcy.

These are the various business bankruptcy alternatives that you can choose from. Businesses have to consider whether it would need liquidation or mere business debt consolidation, take a look at secured debts, tally all their resources, and take time to ponder upon whether or not to appoint a business bankruptcy lawyer to handle bankruptcy filing.

Filing For Chapter 11 Business Bankruptcy - Is It Your Best Choice?

If you own an incorporated business and you need to ask for business bankruptcy protection, two options that you may be taking into consideration are Chapter 11 and Chapter 7 bankruptcy. In Chapter 7 filing, you will have the federal court that presides over your petitioning appoint a trustee who for all intents and purposes becomes the temporary owner of your assets and your business. With this type of business bankruptcy, you would not have a hand in the business operation because it will be the trustee who would be choosing who to hire, who to fire, how to utilize the business assets to pay off creditors, how to structure the business for the benefit of every shareholder, and many more. Depending on your circumstances, filing for a Chapter 7 business bankruptcy may be your most feasible option. Chapter 7 exists for your protection and that of your creditors. However, some businesses facing bankruptcy may find it more attractive to file for Chapter 11 protection.

By filing a Chapter 11 business bankruptcy, you get to maintain control and command over business assets, as well as the business operations. The stipulation from the court is that you must appoint your management team to become a “debtor-in-possession”, or DIP. The DIP acts like an agent, one who works out a deal with your business creditors, with regards to payment terms that are agreeable to both parties. These payment plans may mean periodic partial payments until a debt is paid off to some creditors, while other creditors may agree to take a lesser amount than what is owed to them in exchange for ceasing all legal collection attempts against you. The DIP acts in the capacity of a court appointed trustee, except that it comes from within your own organization and no-one is appointed by the court. The DIP is going to have the business' best interests in mind, whereas a court appointed trustee cares more about paying off creditors.

Whereas Chapter 7 business bankruptcy filing is about liquidation, Chapter 11 filing is “only” about restructuring. With Chapter 11, business operations are restructured to find the best solution that will allow you to pay debts in a timely manner. This may necessitate you to lay off workers, either permanently or temporarily, and may even cause you to excise one entire department. The DIP will be the one who will supervise the whole process and determine what caused the inefficiencies among the company, which eventually resulted to the inability to pay up creditors in a timely manner, and will make sure that those responsible for such inefficiencies are eliminated. The federal court presiding over your Chapter 11 business bankruptcy petition will necessitate you and your creditors to make periodic progress reports regarding the whole process.

When a number of your creditors, or perhaps all of them, are not pleased with the performance of the DIP, they could file a petition in court to have the DIP replaced with its own appointed agent. This is not at all to your business' advantage. Because of this, it is just proper for you to seek the services of an attorney who has the expertise in business bankruptcy law if you are considering filing for Chapter 11. His title will be “Debt Relief Agent”. Your lawyer can give the proper advice to your DIP, and will be able to negotiate with creditors. That way, filing for Chapter 11 business bankruptcy would not result to your business’ destruction.

If you see that business bankruptcy protection is already required by your business, it is best that you seek out the help of an experienced bankruptcy lawyer who could give you the right advice with regards to the filing option that would be appropriate for your business. Likewise, you might also find an alternate solution to filing bankruptcy. Business bankruptcy filing really should be a last resort to salvaging your business.

Filing For Business Bankruptcy Basics

Individuals, creditors and businesses are protected by the bankruptcy law of the United States. Bankruptcy laws for businesses facilitate and enable reorganization of debt to pay off creditors without the business being destroyed or the orderly liquidation of assets to pay off creditors and divide up a failing business for others to buy up parts of and try to make successful. Therefore, the bankruptcy laws protect the business, the owners of businesses, operators and creditors of the business, consumers, and the economy as a whole.

All bankruptcy cases are presided over by federal courts of the United States. There are two types of bankruptcy for business owners, as established by federal law in 1978: Chapter 7 and Chapter 11. There is also what is known as Chapter 13 bankruptcy, but incorporated businesses cannot file under that type. Self-employed individuals, however, may file under Chapter 13.

For businesses, Chapter 7 would entail filing a petition for bankruptcy, then a court-appointed interim trustee would be in control of the business’ non-exempt assets and accounts. This appointed and temporary trustee has broad power over the business during his appointed time. Finding unsecured financing, making managerial changes, and liquidating assets so as to pay off creditors while trying to keep the business from total failure are all within the scope of the trustee's powers. Chapter 7 bankruptcy is the option for liquidation.

For reorganization of a business, Chapter 11 bankruptcy is the option. Under this option, the court oversees a flexible process by which the debtor business and its creditors work out payment arrangements to their mutual benefit and solution. The business' principals maintain control of the business and remain in possession of its assets. The business' management team goes on court record as being "debtor-in-possession", or DIP, and there is no trustee appointed. However, if the creditors see that no viable solution is arrived at by the DIP, and that the assets are still mismanaged, they can petition the court to intervene and to appoint its own agent that will replace the DIP. For the federal court to do this intervention, it must be satisfied with evidence that the creditors are correct in their assessment of continued mismanagement.

The forms filed by the business in federal court, like those that document the business’ assets and liabilities, should be perfectly accurate and filed in the correct manner. The business may lose its bankruptcy protection, and the business could be totally lost, if it fails to accurately and correctly file the forms needed. Therefore, if you own a business either alone or with partners and you deem that you may need to file for bankruptcy, you should consult a bankruptcy lawyer. When the lawyer is working in this capacity with you, he would be put on file by the federal court as a “Debt Relief Agent”.

If you own a business and you and any partners are considering filing for bankruptcy, consult a bankruptcy lawyer who has experience working with business owners.