When a business is struggling, its owners should be familiar with business bankruptcy protections that may be available to help. Corporations, partnerships and sole proprietorships that are struggling with overwhelming business debt and looking to get back on their feet may all benefit from Chapter 11 bankruptcy protection.
Corporations, partnerships and sole proprietorships would certainly benefit from understanding Chapter 11 bankruptcy protection and what it involves. Chapter 11 bankruptcy is a reorganization bankruptcy option that allows the struggling business to reorganize its debts and seek sources of new capital while remaining in business. Guided by the bankruptcy court, the business can usually remain in business during the process and the business owners can remain in charge of the daily operations of the business.
In addition, Chapter 11 bankruptcy provides important protections from creditors during the bankruptcy process as a temporary stay prevents them from pursuing collection actions during the process. Also during the bankruptcy process, the struggling business can endeavor to renegotiate contracts, leases and other debts. Unlike other bankruptcy options, the Chapter 11 process is designed to help the struggling business remain in business and return to profitability.
Additional bankruptcy options are available for struggling businesses that no longer wish to remain in business and want to liquidate the business to repay creditors. Whatever the circumstances, it is important for struggling businesses and their owners to understand the benefits of different bankruptcy options to determine which is the best option for their situation and goals in the long term.