For a variety of reasons, your company is in danger of folding – but fortunately, a failed business bankruptcy lawyer in Dallas, TX can help you navigate the challenges of bankruptcy.
It can be frustrating, frightening, and overwhelming to deal with corporate bankruptcy, but with the right legal team at your back you can choose the option that works best for your company and keep your investors and creditors satisfied. Declaring bankruptcy is a way out from under serious debt, but if you want to keep your company afloat, you have to tread carefully.
You have a couple different options when it comes to declaring corporate bankruptcy. You can choose to fold your company completely and declare Chapter 7 bankruptcy, or you can fight another day by declaring Chapter 11 bankruptcy. Read on to learn more about keeping your business afloat through challenging times with Chapter 11 bankruptcy.
Understanding Chapter 11 Bankruptcy
As a failed business bankruptcy lawyer in Dallas, TX can explain, Chapter 7 means losing your company and going out of business, but Chapter 11 means restructuring and implementing a game plan to get out from under debt. When you file for Chapter 11 bankruptcy, you’re taking steps to save your company without liquidating all your assets, but it’s not as easy as it sounds.
Chapter 11 bankruptcy means keeping many different parties happy. While management may continue to run the day-to-day operations of a company filing Chapter 11 bankruptcy, the big decisions need to be approved by an appointed bankruptcy court. You don’t go out of business, but your company needs to stick to a restructuring plan. It means close supervision, but it also means saving your company.
How do You Set up a Reorganization Plan?
The reorganization plan is key to ensuring the success of Chapter 11 bankruptcy. It’s the plan by which you ensure your company can get out from under debt – but before you can stick to the plan it needs to be approved by the right people beforehand.
Firstly, the debtor company needs to develop a workable plan with certain committees. Once you’ve developed the plan, you need to draft up a formal disclosure statement and reorganization plan to file with the bankruptcy court. The SEC will then review the statement and plan to make sure everything is squared away, and your creditors and stockholders will have to vote on the plan.
If your creditors and stockholders can’t agree on the points of the reorganization plan, it’s back to square one. But if they agree on the reorganization plan and the plan is approved, it’s time for the bankruptcy court to confirm the plan. Once the reorganization plan is approved by the court, your company will stick to it until all payments are made to the necessary creditors.
Get in Touch with the Leinart Law Firm Today
At the Leinart Law Firm, we understand that any kind of bankruptcy can be overwhelming and stressful. Fortunately, you can count on us to provide the necessary guidance to help you through your bankruptcy and get your company back in working order. Reach out to us today, and see how our failed business bankruptcy lawyers in Dallas, TX can help.
Common Myths About Chapter 11 Bankruptcy
Chapter 11 bankruptcy allows businesses to reorganize their debts and get some relief. Even though businesses have been able to file bankruptcy for many years, Chapter 11 is still widely misunderstood. Here are some common myths about Chapter 11 bankruptcy.
- If your business is too small, you won’t qualify for Chapter 11. It is still frequently assumed that Chapter 11 bankruptcy is only intended for large companies. Fortunately, this is not true. In recent years, Chapter 11 has become more accessible for small businesses. As such, if you are a small business owner and are struggling financially, Chapter 11 may be a good option.
- Chapter 11 bankruptcy means you are out of business. Some businesses who file Chapter 11 do go out of business because they are beyond saving. However, this is not the case for the majority of businesses. Chapter 11 can help businesses restructure their debts and create manageable payment plants, allowing them to keep the doors open.
- Filing Chapter 11 bankruptcy will make you lose customers. Some business owners are reluctant to file for Chapter 11 bankruptcy because they are afraid of losing customers. However, most customers will not even know that you filed for Chapter 11 unless they do some digging. Even if you declare Chapter 11, you can expect your customers to continue purchasing your products or services.
- Filing Chapter 11 is a huge hassle. Although declaring Chapter 11 bankruptcy might not be a party, it does not have to be the most difficult task in the world. If you are a business owner who is considering filing Chapter 11, it is in your best interest to work with an experienced lawyer. A lawyer can help you file the proper paperwork on time and negotiate with your creditors. He or she can take a lot of stress off your back and make the process easier.
- Your credit will suffer too much damage. It is true that your company’s credit score will take a hit after declaring Chapter 11 bankruptcy. However, the effect is not as extreme as you may think. If you are at the point where you have to file Chapter 11, your business’ credit score is likely already low. Filing for Chapter 11, therefore, won’t decrease your score that much. In addition, Chapter 11 typically looks better to creditors than repossession