- posted: Sep. 21, 2021
The COVID-19 pandemic has wreaked havoc across the globe and caused businesses to face serious financial hardship. For many, Chapter 11 business bankruptcy has been a useful way of staying afloat during hard times.
As with any bankruptcy filing, the moment you file for bankruptcy protection, an automatic stay goes into effect, which means your creditors are precluded from suing you, foreclosing on property or harassing you for payment.
This gives businesses time to develop a reorganization plan that is then presented to their creditors for review and approval. This plan will also be provided to the bankruptcy judge handling the case. Chapter 11 is beneficial in that it allows you to keep your business’s doors open and bring in revenue while you chip away at debt. This differs from Chapter 7 bankruptcy, also known as a liquidation bankruptcy, where the enterprise is shut down for good and remaining assets are sold off in order to repay a portion of the debt before having the rest discharged.
Under an approved Chapter 11 reorganization plan, businesses make regular payments to their creditors. At the end of the pay period, assuming all payments have been made according the plan, the judge discharges any remaining debt.
Another benefit of a Chapter 11 filing is that, you, as the business owner, continue to operate your business as the “debtor in possession.”
Small businesses can also benefit from Chapter 11 bankruptcy by filing under Subchapter V, which is a recent addition. This subchapter of Chapter 11 is a simplified process that allows a small business to submit a repayment plan to the court without having to get it approved by creditors, so long as the court deems it fair and equitable.
The experienced Chapter 11 business bankruptcy lawyers of Anker Law Group, P.C. in Rapid City, South Dakota are ready and able to help you determine if Chapter 11 is right for you and your business. If it is, we will work to protect your interests while guiding you through every step of the process. Call us at 605-519-5967 or contact us online to schedule an appointment.