Business bankruptcy is also called Chapter 11 bankruptcy. Through this form of bankruptcy, a business can be better financially equipped. They can go through a process to fix their situation and prepare for a more successful future.
Chapter 11 bankruptcy will stop the shutdown of your business by any creditors, vendors or banks. By claiming bankruptcy, you will be able to acquire a slow stream of payments to your creditors, which can allow your business to have a revenue stream as well. This 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. This process encourages the business to maintain running operations and for the employees to work in order to increase the net income.
When individuals are filing for their own personal bankruptcy, they may be better suited through Chapter 7 or Chapter 13 bankruptcy. These processes are used more often for individuals while Chapter 11 is used more often for businesses that are not doing well financially.
What is the filing process for business bankruptcy?
You will need to file a bankruptcy petition to begin the process of business bankruptcy. 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. An automatic stay is put in effect once the paperwork is officially filed. 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.
Who does the meeting of creditors involve?
At a meeting of creditors, you will attend a session where any creditors you owe and wish to attend will also come. For these meetings, the creditors you owe the most money to will be most likely to attend to learn about your reorganization and repayment 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.
Detzky, Hunter & DeFillippo, LLC is an experienced law firm that has proudly served clients across New Jersey for decades from their convenient locations in Freehold and Somerville. If you need strong legal guidance, contact us today to schedule a consultation. We are lawyers who listen, counselors who care.
