How Does Chapter 11 Bankruptcy Protect My Small Business?
Chapter 11 Bankruptcy & My Small Business
Chapter 11 bankruptcy has already been seen in the news attached to many major corporations. These are cases that are filed by companies and businesses that are struggling financially. Of course, you are going to need the assistance of chapter 11 bankruptcy attorney Baltimore Maryland. Companies are able to restructure their finances via a reorganization plan once it goes through bankruptcy court. The Law Offices of Kim Parker can help small businesses that are in struggling and need some help. This is the place to go if you are looking for bankruptcy attorneys Baltimore MD.
How do you qualify for Chapter 11 Bankruptcy?
Chapter 11 is not just for small businesses. An individual that falls under chapter 7 bankruptcy may also take advantage of chapter 11 to help overcome their debt issues. Individuals who file chapter 11 do so if they exceed debt limits for a chapter 13 bankruptcy. Businesses, as well as professional athletes and celebrities file chapter 11 instead of a 13 since they have much more unsecured and secured debt. To summarize, corporations and businesses are more likely to file chapter 11, but there are rare cases where an individual will not qualify for 7 or 13 with the amount of debt they have and therefore become eligible for a chapter 11 bankruptcy. If you are a corporation or small business that needs help, you can contact a Maryland bankruptcy lawyer to help you with the process.
Also, in order to qualify for chapter 11, a business must have a debt of $2,566,050 or less.
What are the benefits of Chapter 11?
There are several benefits of filing a chapter 11 bankruptcy such as:
- Having the ability to keep your business running during the bankruptcy process. This gives businesses the advantage of not having to lose their customer base and goodwill.
- Automatic stay of all creditor actions- This just simply means that creditors cannot attempt to collect any further debt once a bankruptcy has been filed. All foreclosures, liens, levies, repossessions, and lawsuits will come to a halt. In order for a creditor to continue to collect any debt once the bankruptcy has been filed, they would first have to obtain such relief from the automatic stay which the bankruptcy court will have to grant.
- Loans can be obtained at more favorable rates- Businesses that have recently filed chapter 11 bankruptcies can obtain emergency financing to help keep their business flowing. These funds will cover payroll, supplies, etc.
- Get rid of Liens, and sell property- Some businesses may choose to sell their assets and anything else they feel the business does not need anymore. This helps bring in much-needed cash to continue operations and restructuring.
A Baltimore chapter 11 bankruptcy attorney will also go over everything with you.
How will Chapter 11 Bankruptcy affect my business?
Chapter 11 bankruptcy allows a business to reorganize and become profitable once again. As mentioned, management will still be able to run the business normally, but any decisions that are considered “significant” must be approved via bankruptcy court prior.
Chapter 11 differs from chapter 7 in that, with chapter 7 businesses will have to completely stop all of their operates meaning they will go end up shutting down. All assets will be sold which will then be used to pay off debt.
Companies would prefer to file chapter 11 because they can keep their company in business. There are times when the company will be able to sort out some type of plan to regain profitability, but there are other times when they may not be able to. Any stocks and bonds may continue trading as well.
The plan that is developed to help the company get out of debt must be accepted by bondholders, creditors, and stockholders, and approved by the court. If a creditor were to reject the plan, the court can still override the decision. A more detailed report must be filed once the initial one has been confirmed. A Baltimore Maryland Bankruptcy Attorney will be able to assist you with any questions you have along the process.
Most all businesses will need legal help. Therefore it is important to seek the guidance of a bankruptcy attorney Baltimore MD. This will allow for a much smoother transition, in the event a creditor were to decline a plan. To find a reputable attorney, all you need to do is search for Baltimore County Maryland bankruptcy.