If a business is going through hard financial times, the most important thing is to find a way to get the debts repaid, while at the same time maintaining and growing the current business streams. This can be a hard act to juggle, and there are many possible strategies that can aid you in going about doing this. One of these options can be filing for Chapter 11 bankruptcy for businesses.
When a business files for Chapter 11 bankruptcy, they are offered the means to reorganize their business so that potential profits are not lost and so that the business can be run more efficiently. Bankruptcies such as these are processed through a particular legal system that can aid the business. This legal system is called bankruptcy court.
What will happen to the debts of the business?
The owner of the business, when filing for Chapter 11, becomes a "debtor in possession". This means that although they have debts, they also possess business assets. The benefits of bankruptcy court for the debtor in possession is that they are likely to be dismissed of some if not all of their debts. This is usually decided in terms of the value that the business has for society over the sum of its assets.
In order to file for Chapter 11 bankruptcy, whether you are a large or small business, you will start with a formal filing in Florida, or in the state that your business is registered. You should do adequate research to ensure that the type of bankruptcy that you are filing for will suit your particular needs.
Source: The balance, "Chapter 11 business bankruptcy explained," Oct. 18, 2017