Business owners in North Carolina face many challenges that can put their companies at risk. Financial difficulties can become overwhelming, making it hard to pay bills and manage debts.
Chapter 11 bankruptcy might offer a solution for those looking to reorganize and save their businesses. It allows companies to restructure their debts and continue operating while paying back creditors over time.
When is Chapter 11 bankruptcy a strong option?
Business owners should consider Chapter 11 bankruptcy when they believe their company has a viable future but needs time and relief from current financial pressures. Unlike Chapter 7 bankruptcy, which involves liquidating assets, Chapter 11 focuses on reorganization. This process can help businesses stay open and avoid the drastic measure of shutting down completely.
What are the benefits of Chapter 11 bankruptcy?
Chapter 11 bankruptcy can benefit businesses facing various financial problems. It can stop foreclosure on business properties, halt lawsuits from creditors and prevent the termination of essential contracts. This can give business owners the breathing room needed to restructure operations and return to profitability.
How can I file for Chapter 11 bankruptcy?
The first step in Chapter 11 bankruptcy involves filing a petition with the bankruptcy court. This petition includes detailed information about the company’s assets, liabilities, income and expenses. After filing, the business continues to operate, but significant decisions will require court approval. This ensures that the business acts in the best interest of its creditors and follows a strict budget.
Will I lose control of my business after filing for bankruptcy?
Chapter 11 bankruptcy offers the advantage of staying in control of the business. While the court may appoint a trustee to oversee certain aspects, the business owner often remains in charge of day-to-day operations. This allows you to implement changes and guide the company back to financial health.
Data from the United States Courts shows that there were 452,990 total bankruptcy filings in the year ending December 2023. This figure goes to show that bankruptcy is a valid and functional solution used to great effect by individuals and business owners throughout the country.