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.
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.
