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Maintain and restructure your business through bankruptcy

Even the most successful businesses can go through tough times, and in such instances, bankruptcy may be a necessary option. A proper bankruptcy plan may help companies to eliminate financial strain and regain a solid footing.

There are different types of bankruptcies, and they serve particular purposes. For those business owners looking to maintain and restructure their business, a Chapter 11 bankruptcy may be the way to go.

Chapter 11

A Chapter 11 bankruptcy is basically a plan that allows business owners to reduce payment amounts and restructure certain payment terms, as well as sell assets. This lets the owners balance their income with their expenses and provides an opportunity for them to regain profitability. With the restructuring of the business' assets and liabilities, the business is able to stay open through the bankruptcy process.

Eligibility

The United States Code Title 11 Chapter 301, 303 fully details the protocol for a Chapter 11 bankruptcy, including eligibility. Many corporations and some small businesses are eligible for a Chapter 11 bankruptcy. If a company meets the small business designation, it may be possible to fast-track the process. However, this does come with additional obligations, such as extensive reporting and additional oversight.

Restructuring

Usually, after businesses files for Chapter 11 bankruptcy, they have four months to submit a proposal for restructuring. However, if a business can show good cause, the court may be willing to extend the period up to 18 months. The creditors may either accept the restructuring proposal or submit competing reorganization plans. The court considers the proposals and makes the final determination.

As you can see, the general process for bankruptcy is forward. Even so, considering all of the moving parts, especially with a business or corporation, the process may be quite in-depth. Having the right attorney on your side may be critical in successfully filing a bankruptcy and restructuring plan. Take some time to review the process and requirements so you may gain an understanding of what to do and make the best decision for your company moving forward.

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