Sometimes, people talk about bankruptcy like it’s a bad thing. Realistically, it’s a protection that can help you get out of difficult financial situations and improve your financial outlook.
As a business owner, you need to understand the benefits of using bankruptcy to your advantage. Depending on the situation, you could even save your business and help it become more profitable by using a bankruptcy to resolve your debts.
Chapter 11 bankruptcy helps businesses take the time necessary to restructure
If your business took a hit during the economic downturn or you’ve found that you aren’t bringing in profits as consistently as you’d expected, then you may be facing tough economic times. You may not be sure if you can keep your business open or pay back the debts you owe.
It’s essential that you do consider using bankruptcy to help you in these circumstances. You may consider Chapter 11 bankruptcy, which is also referred to as “reorganization bankruptcy.”
Why choose Chapter 11 bankruptcy?
Chapter 11 bankruptcy is unique because it gives businesses time to negotiate with creditors and reorganize the way they run. A business that successfully completes Chapter 11 bankruptcy can emerge from bankruptcy with a lighter debt load and with positive income on the books.
During a Chapter 11 bankruptcy, you can keep your business open. You can continue to pay your staff and have them operate the business freely, though you may lay off some people if doing so would help your business grow in a positive direction.
Chapter 11 bankruptcy gives you the time to go over your debts, review options for selling items or cutting costs from your budget and seek out options for boosting profits. With court approval, you may also be able to borrow new money, so you can invest into your business to help it grow and become profitable once you emerge from bankruptcy completely.
When you feel overwhelmed because of business debts but you want to keep your business open and operating, Chapter 11 bankruptcy may be a good choice. This is something to consider if you are considering ways to keep your business running but are falling behind on payments.