A business bankruptcy is also known as Chapter 11 bankruptcy. This form of bankruptcy is recommended for individuals who own a business that is going through financial troubles. When individuals are going through a personal bankruptcy, they may be better suited for Chapter 7 or Chapter 13 bankruptcy.
When you are granted Chapter 11 bankruptcy, it will stop the shutdown of your business by any creditors, vendors or banks. Instead of sending all income to those you owe money to, claiming bankruptcy will allow for a slow stream of payments to your creditors, which can allow your business to have a revenue stream. Chapter 11 bankruptcy also allows businesses to keep their line of credit and to receive any money owed to it. Insurance money from an open claim is allowed to remain flowing. The main goal of Chapter 11 bankruptcy is to make the business able to create a profit again. It is important to keep the business running and the employees working in order to increase the net income.
How do I file for business bankruptcy?
With a Chapter 11 bankruptcy, your business can be able to stay open. You can maintain your daily operations. With your business still in operation, your employees can keep working as well, which means you will not have to have layoffs. All of this can help ease your stress as a business owner. A bankruptcy attorney can provide more information on what to expect and can guide you along the process.
To begin the process, you will need to file a bankruptcy petition. In this petition, you will need to include a financial statement, a list of all assets, a list of liabilities and a statement of any outstanding contracts or leases. Once the paperwork is filed, an automatic stay is put into effect. With this in effect, you will be given the space needed to reorganize your business and financial plans. An automatic stay stops harassment from creditors and allows debtors to focus on planning their new finances.
What is the meeting of creditors?
At a meeting of creditors, you will attend a session where any creditors you owe and wish to attend will also come. At this meeting, the creditors you owe the most money to will be able to meet with you and your attorney to find out about your reorganization plan. This plan is made with your attorney to continue paying your operating costs while paying off debt at the same time. The plan must be approved by the bankruptcy court to ensure your status.
The repayment plan is built to help you. In this plan, debt payments that your business built up are restructured. This means that these payments will now be paid throughout the course of a five-year plan.
Matters related to bankruptcy and estate planning are very significant in one’s life and require the services of an experienced attorney. Our firm proudly serves clients throughout Rockland County and New York State. If you need effective legal guidance, contact Koplen Law today to schedule a consultation.