Is your business on the verge of bankruptcy? This article examines one of the options that are available to you.
Chapter 11 can be filed in case a business is unable to repay its debts or creditors. Filing chapter 11 can be done either by the company or its creditors in a federal court for bankruptcy. This means that the debtor retains all assets and control of the business, and works towards repaying all debts at the same time.
Filing chapter 11 bankruptcy has many features that are common with other bankruptcy proceedings. It empowers trustees to run the debtor’s company and unless a different trustee is allotted, the debtor himself becomes the trustee as the debtor in possession.
Filing bankruptcy under chapter 11 gives the debtor a chance to restructure all financial ventures on favorable terms with new lenders. The new favorable terms included in filing chapter 11 often dictate that lenders get the first priority when it comes to business earnings, but in the long run, it proves profitable to the debtor.
Since this usually results in reorganizing the business, most debtors come out of bankruptcy and start all over again. Most of the time, the second chance proves to be lucky as previous mistakes are avoided and business flourishes.
Filing chapter 11 begins with forwarding the petition in the bankruptcy court near the area where the debtor is residing. The petition can be a voluntary petition or one put forward by the creditors. The debtor also needs to file a list of all his assets and liabilities, a list of his current income as well as his expenditures, contracts that are being executed or need to be executed, leases that have not yet expired and a full statement of his current financial affairs. For individuals, some additional documentation may be required.
The primary advantage of filing chapter 11 instead of some other chapter is that the business continues to operate. For the creditor, it proves to be of advantage since all unsecured debts will be partially paid back instead of being discharged completely. Moreover, under chapter 11, the unsecured debts can be restructured in a way that the subsequent payments are lowered but spread across a longer time period.
One of the most important aspects of filing chapter 11 is that it gives you time to get your company back on track without letting it collapse totally. You can enjoy an automatic stay and soon get going again.
Check out our websites today if you want to learn more about filing chapter 11 or how a VPS forex account can help you make money on autopilot!