If your business is collapsing under the weight of its debt and you are the owner or operator, then you may decide that the best way to get your business through its debt is through Chapter 11 bankruptcy. The following are 4 of the biggest benefits in terms of filing for Chapter 11 bankruptcy. The bankruptcy lawyers at Flynn Law Firm have more detailed answers to questions you might have, if you have further questions about the Chapter 11 bankruptcy process and whether Chapter 11 is the best choice to file for your business, contact us today for a free case review. We’ll discuss your rights and options in bankruptcy as they pertain to your business.
1. Business Running in Bankruptcy Process
A business that goes under Chapter 11 bankruptcy, unlike Chapter 7, will remain open and continue to work in the former’s favor, albeit with the oversight of the court for a time. If you’ve worked hard to build a business, you naturally do not want to shut it down because you are financially troubled. If you file chapter 11 bankruptcy, you can continue your business while you’re in bankruptcy so you don’t lose your business, and its goodwill and customer base.
2. Emergency Relief for Operations
Within a few days of filing for a Chapter 11 bankruptcy, the business and its bankruptcy will be heard to emergency motions before the bankruptcy court in an expedited hearing. The hearing is an opportunity for the business to request the court empower the business to take some action to permit the business to do the normal course of the business, continue to pay wages and benefits to employees, filing and paying taxes, or meeting any contractual obligation, e.g., rent, insurance premiums, or vendor invoices.
3. Treatment Of Unexpired Leases and Executory Contracts
Often the financial burdens placed by leases and other executory contracts (contracts involving continuing obligations by all the parties) are the ones that get the business in the first place in bankruptcy. The Bankruptcy Code allows a business taking itself to Chapter 11 bankruptcy to reject these types of agreements. This will result and make the counterparty of the contract an unsecured creditor of the contract amount in case there is any outstanding balance. After curing any default, debtors may also assign or assume contracts. So, if the business file for bankruptcy, the counterparty must continue performing under the contract unless the business later decides to reject the contract. Consequently, businesses in Chapter 11 legal bankruptcy have a lot of freedom regarding their present contracts.
4. Offer Sell Property Free and Clear of Liens and Interests
When a business is restructuring, it may determine selling some of the assets and other property that it does not need to make some much-needed cash in order to run the business and the restructuring plan. It would probably be very difficult for these assets to be sold, outside of bankruptcy, because if these assets are presently encumbered with liens, encumbrances, or other competing interests, the buyer would then have to be faced with the expense and the time associated with clearing the liens, encumbrances, or other competing interests.
Call The Flynn Law Firm and Schedule A Free Chapter 11 Bankruptcy Consultation
Chapter 11 Bankruptcy Attorney Near Little Rock, AR can assist your business in determining whether it should advance with a Chapter 11 Bankruptcy and may be able to help guide your business through the bankruptcy process. So, feel free to call us or fill out the contact form on our website to talk to us now.
