There are multiple forms of bankruptcy available to those who have to file. Some bankruptcies concern only businesses while others are available for personal bankruptcies. Businesses may choose to file for Chapter 11 bankruptcy. This type of bankruptcy allows businesses to financially reorganize or restructure.
Am I Eligible to File a Chapter 11 Bankruptcy?
Sole proprietors, partnerships and corporations are permitted to file Chapter 11 bankruptcies. In the instance of a corporation filing, the stockholders also count as the owners. Because of this, stockholders’ personal assets are protected, though the value of their stock (in which they invested their personal funds) may be affected by Chapter 11 bankruptcy. When a partnership is concerned, the creditors may pursue repayment resulting from the partners’ personal property—meaning the court may order the filers to sell off property to repay debts. The business’ property may also fall into this category. When this occurs, it may be beneficial for the partners to file for personal bankruptcy at the same time. A Minneapolis bankruptcy law expert can assist you with multiple filing types.
Why Should I File for Chapter 11 Bankruptcy?
Under Chapter 11 bankruptcy, businesses can continue operation. Chapter 11 bankruptcy emphasizes reorganization—meaning that businesses determined to be viable should remain open. The rationale is that reorganized and properly-functioning businesses can eventually repay creditors and preserve jobs. Because of this logic, Chapter 11 bankruptcies include repayment plans.
Businesses filing for Chapter 11 bankruptcy must reorganize finances. Additionally, this is a benefit for businesses wanting to restructure management or cut down on costs.
How Does the Chapter 11 Filing Process Work?
As with all bankruptcies, the debtor files a bankruptcy petition with his local court, usually with the help of a Minneapolis bankruptcy attorney. The petition reveals a company’s debts and assets. The court then offers a judge or trustee to assess the report and formulate a repayment plan. This part of the process is particularly complicated and many feel that it requires the expertise of a Minneapolis bankruptcy attorney. This is also the most expensive part of the process and it concerns the viability of the business—it is not something to do without expert advice.
While Chapter 11 bankruptcy can offer complications, it is a viable alternative to closing a business that still holds possibilities for its owners and employees. The company receives financial reorganization assistance and may proceed with a more solid plan and a strong future. If you are considering Chapter 11 bankruptcy for your business, partnership or sole proprietorship, discuss the possibilities with your Minneapolis bankruptcy lawyer.
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