Chapter 11 Can Help Your Business Move Forward


If you’re a small to medium size business owner faced with: (1) worrying about meeting your company’s financial obligations such as payroll and taxes; (2) unreasonable creditors who refuse to work with you on past due payments; or (3) looking to secondary or private financing with exorbitant interest rates just to meet monthly expenses, then you should consider reorganizing your company to get it back on its financial track. A business reorganization under Chapter 11 of the Bankruptcy Code will help your company get the interim financing needed to stay in business while holding off your creditors to give you breathing room to get your business moving forward.

Unlike consumer bankruptcy where a trustee is appointed to take control of the debtor’s assets, a Chapter 11 business owner (aka “debtor-in-possession”) will continue to run his or her company, conducting normal business operations. The company continues to use, lease or sell business property as it would in the ordinary course of business without the bankruptcy court’s approval. In addition, the Chapter 11 company has the ability to break any commercial lease. This includes the lease for your business space. In many instances, a company’s major fixed expense is its lease payments for equipment or building space. The company can obtain operating capital as well. You may wonder how that is possible as the company is in bankruptcy.  Bankruptcy courts understand that businesses cannot operate without cash flow. To get lenders to lend, the bankruptcy court gives the lender a priority payment status over other unsecured creditors or will allow liens on business property.

If your business is experiencing financial difficulties and you need to explore your business reorganization options, give me a call at (480) 833-1113. I offer free consultations.

Attorney Profile: Janet Spears, Bankruptcy Attorney


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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