Debt issues could interrupt your business operations, forcing you to concentrate your efforts on fighting off insistent creditors. Chapter 11 Bankruptcy likewise referred to as Business Reorganization provides business owners the chance to reorganize their debts and repay them between three and five years. It’s likewise a viable alternative for individuals harboring substantial debts and assets.
Basics of Chapter 11 Bankruptcy
Chapter 11 Bankruptcy can stop your creditors from taking your property and filing legal actions against you. The majority of those who file for a Chapter 11 intends to maintain their business operations. On the other hand, if you’re considering liquidating your assets and don’t really need to maintain your operations, you can consider a Chapter 7 bankruptcy instead.
With a Chapter 11, you will still be in charge of your business operations and daily activities will go on as usual. However, huge decisions like expansion will need approval by the court. In addition, according to godfreylawyers.com, an experienced business bankruptcy lawyer in Ogden, majority of Chapter 11 petitioners include restructuring of several debt types such leases, unsecured and secured debts, and priority tax debt, while trying to preserve business assets.
Securing a Chapter 11 Bankruptcy
Trying to get approved for a Chapter 11 is somewhat similar to an election since every all your creditors — secured, unsecured, and priority tax — will have to vote to reject or accept your proposed repayment plan. The court will order you to begin soliciting votes following initial hearings. Preferably, you must get all creditors to accept your proposal so that the judge will approve it. With this said, it’s in your best interest to have a lawyer at your side since you’ll also need to effectively negotiate different repayment terms with each individual creditor to get them to accept your plan.
If a creditor rejects your proposal, this could hinder the court from approving your proposal. Moreover, if all your creditors don’t accept your proposal, you’ll have to request that the judge approve your bankruptcy plan over the rejections of your creditors. This is known as a “cram down” request since you’re basically requesting the court to cram down your repayment proposal terms to your opposing creditor’s throats.
An experienced bankruptcy lawyer will help you successfully negotiate terms with each of your creditors to ensure that you restructure your debts in a manner that will permit you to come out from bankruptcy with your business still intact.