Debt can be a heavy burden on businesses. If you are a business owner and your company currently has a significant amount of debt, it’s likely that this has taken a major toll on your ability to run your company. You may even be concerned about its future viability.
It’s therefore important that you are proactive in your approach to considering ways in which you can improve the financial situation of your business. Bankruptcy is a realistic option for many companies with financial struggles, as it can pave the way for a more financially successful future. Chapter 11 bankruptcy is particularly suited to struggling businesses since it can help to reorganize the business structure and plan for future profitability. The following is an overview of this bankruptcy Chapter.
Chapter 11 bankruptcy
Chapter 11 bankruptcy targets business entities that have accumulated significant debt and struggled with profitability. The goal is to renegotiate leases and contracts to increase the cash-flow situation Compromises can often be made between creditor and debtor, since creditors are incentivized by the possibility of eventually receiving their payment.
Through Chapter 11 bankruptcy, the business submits a reorganization plan along with a plan of repayment for at least a portion of the owed debts. Debts are prioritized as part of this plan. If the plan is confirmed by the court, all debts not addressed will be discharged.
If you are a business owner currently struggling with quickly accumulating debt, you may want to look into the ways in which filing for Chapter 11 bankruptcy could help your situation and get your business back on track.