Your company is in trouble. You cannot pay your bills. You have already let some people go because you did not have the funds to pay for them anymore. To make matters worse, the severance packages you offered have you strapped. Should you file for Chapter 11 bankruptcy? Before you take a walk to your local courthouse to file, it is helpful to know the Chapter 11 Bankruptcy definition and how it works. Then you can make an informed decision about business bankruptcy for your company.
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What is the Chapter 11 Bankruptcy Definitionompasses many ideas. You may have heard about personal bankruptcy from your local newspaper or the evening news. You might even know someone who has filed for personal bankruptcy. But the law treats business and individuals differently. If you declare business bankruptcy, it will not look the same as a personal bankruptcy filing. To make matters more complicated, there is more than one type of business bankruptcy. When most businesspeople want to save their business, they are referring to a Chapter 11 bankruptcy.
So what does Chapter 11 bankruptcy involve? The formal Chapter 11 Bankruptcy definition is when a business uses bankruptcy to reorganize. In other words, the company does not erase all debts. How much debt it gets rid of depends largely on the court's ruling. The real purpose of filing Chapter 11 is to reduce debt and restructure the company so it can eventually pay back all debts. Also, Chapter 11 does not mark the end of your company. It allows your business to continue running so it can eventually turn a profit again. As a business owner undergoing Chapter 11, you should know that you will be under constant supervision of the court. They will help you negotiate with a committee of your creditors, and they will assign a trustee to supervise your business.
How to file Chapter 11
If you decide to file chapter 11 bankruptcy the next step is to find a bankruptcy lawyer. You will meet with your selected lawyer and go through all your business and financial problems. Then, you will complete filing forms and you may need to appear in court. You bankruptcy attorney will help you through this preparation, so make sure he or she specializes in commercial bankruptcy cases.
Understand the Entire Bankruptcy Process
Understanding the Chapter 11 bankruptcy definition is just the first step. If you decide to declare business bankruptcy, it is a good idea to read up on Chapter 11. You will know what to expect from your attorney and the process will go more smoothly. The filing starts a legal procedure that can take up to five years to complete. Therefore, you should not only understand Chapter 11 laws, but also the subsequent steps you must take to come out of bankruptcy with your company in tact.
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