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Successfully restructuring a business through bankruptcy

Business owners invest great amounts of effort and finances into their companies. Unfortunately, businesses can still fall on hard times, and sometimes they need to receive a fresh financial start

Especially in the case of a business, there are ways that a bankruptcy may be of assistance. There are a few things business owners should know about restructuring their companies through bankruptcy.

Chapter 11 bankruptcy

With the structure of a Chapter 11 bankruptcy, businesses may stay open through the process, which is one of the most appealing benefits for the owners. Under the bankruptcy, the business is able to sell certain assets and restructure payments on some debts. The new payments allow the business to pay within its means so that it may begin gaining profits again.

Process

To begin the process, businesses apply for bankruptcy. Once the bankruptcy court accepts the filing, the business has four months to submit a restructuring plan. It is possible to request more time, at which point the courts may allow up to 18 months. In order for a restructuring plan to receive approval, debtors and the court must agree to it. In cases where debtors do not agree with the proposal, they may submit their own, and the court makes the final decision.

Qualifications

There are certain requirements to qualify for a Chapter 11 bankruptcy, which the U.S. bankruptcy code details in full. Generally, most corporations qualify for the bankruptcy. Some small businesses may qualify as well, and depending on the size, it may be possible to participate in a fast track process. However, the fast track does come with additional provisions that the company must submit to, such as additional oversight of the court and special reports.

These are a few of the important points for a successful bankruptcy for a business. It may also be beneficial to speak with an attorney to determine all viable options and to select the best one for the company.

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