Individuals who struggle to pay their debts may get relief through Chapter 7 or 13 bankruptcy. Businesses have a similar option in Chapter 11. Although several high-profile cases of Chapter 11 bankruptcy have made the national news, most cases are far less dramatic. These cases are typically filed by the company, not the creditors, and allow the business to pay off debts while continuing daily operations.
What Can a Business do in Chapter 11
Most companies are able to continue operating and earning a profit. With the help of a Chapter 11 Bankruptcy Law Attorney in Lake Worth FL, businesses create a plan to get out of debt. This plan must be feasible. Proposing a plan that the business cannot realistically meet doesn’t make sense and is unlikely to be confirmed by the court. The plan must also be in the best interests of the creditors, not the company. Most companies do not have to pay the full amount of what they owe but they are required to repay a fair and equitable amount to each creditor.
What Can’t Businesses do in Chapter 11
There are some things a business is not able to do once it files for bankruptcy protection. A business in bankruptcy cannot take on more secured debt without approval from the court. They also need permission to enter into a new lease agreement. Businesses cannot hire a new Chapter 11 Bankruptcy Law Attorney in Lake Worth FL after the bankruptcy case has started without court approval. Essentially, a business cannot enter any contracts that could result in them spending money that could be paid to creditors.
Chapter 11 bankruptcy is an effective way to reorganize a company’s assets and debts. Many companies thrive after bankruptcy. Some, however, must close because they don’t earn enough profit to pay the debts. Companies that think they may benefit from this type of debt relief may could get the answers they need if they visit . It’s important to not wait until it’s too late to seek assistance with debt problems. An experienced Chapter 11 Bankruptcy Law Attorney in Lake Worth FL could help a company draft a plan to get out of debt successfully.
