The Benefits and Drawbacks of Chapter 11 Bankruptcy
If your business is struggling with unpaid loans or other debt, bankruptcy may be the logical answer. If you have a strong reason to believe your business will succeed in the future and you need time to implement a plan, a Chapter 11 "Debtor in Possession" bankruptcy may be appropriate.
Chapter 11 is a business bankruptcy for corporations which have many assets or which anticipate having a viable business in the future if it were to be unhampered by a huge amount of debt.
The benefit to Chapter 11 bankruptcy is that the business hopefully will have a plan confirmed by the court that would allow it to continue to do business and handle its creditors through the bankruptcy court reorganization procedure while the debtor remains in possession of and continues to run the business.
The drawback to Chapter 11 is that it is very expensive and very time-consuming. It is also important to be aware that your creditors, the court, and the Trustee will usually involve themselves in the business affairs of the company. That is often a very unattractive option for small business owners. In these cases, it is often wise to explore other options.
An experienced attorney at Pelley Law Office L.L.P. will evaluate and advise whether a Chapter 7 or Chapter 11 will best benefit you, depending upon the facts of your small business' situation. If you are personally obligated for the debts of the corporation, then we will discuss your eligibility and your options of filing either Chapter 7 or Chapter 13 personal bankruptcy.
Chapter 13 bankruptcy is called a "Wage-Earner's Plan" and is not available for businesses. However, it is available to individual debtors, and may be the best option for business people who have personally guaranteed a company's debts who also have issues with the IRS, a foreclosure, or repossession.
A Chapter 7 bankruptcy can be filed for many individuals who are current on their secured creditors, and have personally guaranteed the debts of the corporation that they are closing.
Get Answers About Chapter 11 Business Bankruptcy in North Texas
We invite you to call Pelley Law Office, L.L.P. at 972-608-0335 or 903-813-4778 to schedule a free confidential consultation with an experienced bankruptcy lawyer. You can also contact us by e-mail now to request an appointment.
Questions? Feel free to visit our Bankruptcy FAQs. To learn how we have helped clients in North Texas deal with overwhelming debt and other legal problems, please view our Client Testimonials.
