Chapter 11 bankruptcy is in important tool for struggling business and individuals to use that can both help a business get back on its feet and protect the personal assets of the business owner. Chapter 11 bankruptcy can help a struggling business create a repayment plan that provides the opportunity for future growth of the business.
In addition to providing a reorganization plan opportunity for the struggling business, and allowing it to renegotiate some debts or seek new sources of capital, Chapter 11 bankruptcy can protect some of the personal assets of the business owner in circumstances when they have a sole proprietorship or partnership. Any type of business, including corporations, may benefit from the Chapter 11 bankruptcy process which is important to understand. It also typically allows the business owner to remain in day-to-day operation of the business.
Also important to note is that immediately following the filing of the bankruptcy, creditors must cease enforcement and debt collection activities against the business or individual as the case may be. This can provide enormous relief to a struggling business or individual and is known as the automatic stay that protects all filers for bankruptcy, including Chapter 11 bankruptcy.
The day-to-day struggles with overwhelming debt and trying to stay in business can cause untold amounts of stress for struggling business owners that simply want to focus on putting their business back on the right track. Chapter 11 bankruptcies may be one option for them to consider to enjoy profitability once more, put the struggles behind them and enjoy a fresh financial start and future for their business.