Chapter 11 bankruptcy is a restructuring type of bankruptcy that is only available for businesses. Any size of business can file, but this type is most often used by large corporations looking to prevent filing for Chapter 7 liquidations bankruptcy. Chapter 11 normally allows the business to stay open, restructure itself to run more efficiently and pay off a portion of the debt they owe through affordable monthly payments. If you are considering Chapter 11, here are a few tips to smooth the process.
- Make sure you need to file bankruptcy. Just because your lenders are harassing you is not a good reason to file. Look at your finances and see where you could cut back. This may be painful, but the entire company could be at risk. Consider debt consolidation, or sell off a piece of the company if you can. While Chapter 11 may allow you to keep your company open, the courts can decide your company cannot be saved and force you into Chapter 7 liquidation. In Chapter 7, everything will be sold off to pay off your debts and you will lose your company. Bankruptcy Chapter 11 should only be used as a last resort, not an easy way to get rid of debts.
- Hire good Chapter 11 lawyers. Always. Do not think you can do this on your own to keep a few bucks. The point of this type of bankruptcy is to save the business, make sure you hire a professional to take care of it. This process will involve negotiating payments with your creditors, and a Chapter 11 Mimi lawyer will make sure you get the best deal possible. If you are at the point of bankruptcy, your focus should be on healing your company, not dealing with your creditors.
- Make sure your financial documents are organized. This may be a hassle in itself, but it will save you a larger headache down the road. You need to turn all of your financial records over to your bankruptcy lawyer. Figure out who you owe and how much as well as profits and payroll. The paper work is going to get very complicated. Get your paper work organized and figure out what paper work you might have to locate. This will make the actual filing go much smoother.
- Expect for you company to be completely evaluated. Every penny spent or earned will be examined. Be prepared for your creditors to ask for information you might not want to divulge. You could be required to cut departments, fire people or get rid of product lines the court deems unprofitable. It might be uncomfortable to have someone tell you what to do with you company. Keep in mind, you are essentially asking your creditors to let you pay less than you owe them. They are under no obligation to let you. Remember you are asking your creditors for a favor.