3 key
guidelines when restructuring your business. Debt & operational
restructuring.
Filing chapter 11 can be a difficult, confusing, and frustrating
process. The common belief that a business is lost after filing
Chapter 11 is false. The difference between filing Chapter 11
and Chapter 7 exists between the way they solve the problem of
debt. With Chapter 7 a company liquefies its assets and pays
off debt, but with Chapter 11 the company keeps assets and reorganizes
the debt in a more manageable way. So, many companies bounce
back after filing Chapter 11.
Can a business come back after filing Chapter 11? Sure. Any
business with the right goals and approach can come back from
the depths of debt. The process of chapter 11 provides a way
to ease out of certain debts and return to a profitable company.
Chapter 11 involves the courts. They view the company as having
a certain path, if they stray from that path, then they may lose
their business, but if they stay within its boundaries, then
they will survive.
Filing Chapter 11 and What that Means Exactly
So you have heard the talks on television, in magazines, and
papers about the large companies filing Chapter 11 bankruptcy.
They sometimes survive and come back with a new name or a new
approach to their business. During the process of filing chapter
11 they have overcome certain obstacles which we will describe.
Once filing chapter 11 a company enters the court system. The
courts can waive certain debts to relieve some of the financial
distress. These burdens can include long-term lease agreements,
unsecured loans, and union contracts. Once the court removes
the financial roadblocks, a company can negotiate with the creditors
and agree on the amount they will pay back and how they will
do so. The business owner must come up with the plan to rejuvenate
their business. If they do not provide a clear plan, then the
creditors who are owed money can step in and do so. The courts
may grant the creditors plan over the business owners, thus removing
the business from the hands of the owner.
By knowing the laws, the ways to approach filing Chapter 11,
a business owner can succeed in turning around a failing business.
It can breathe new life into a company and help it back onto
the road to success. The courts want to keep companies from failing,
as no one benefits from a defunct business.
Restructuring
business? How to turnaround your business and avoid
bankruptcy.
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