Like many small business owners filing for bankruptcy over the last year, you may be reeling from the economic downturn caused by the pandemic. Whether you are struggling to pay your vendors or can no longer afford your lease, you may feel like your only option is to close shop. However, there is a solution that can help. When you work with Chapter 11 lawyers, you can restructure your debt and give your business the relief it needs to keep the doors open.
At CMC Law, we will utilize our specialized skills to secure the future success of your business.
Filing for Chapter 11 Bankruptcy
When you file for Chapter 11 bankruptcy, it provides your business with legal protection while you work out a debt repayment plan. To start the process, you must work with a Chapter 11 lawyer to file a petition with the court. In most circumstances, this filing is voluntary on your part. However, in certain situations, your creditors may file the petition on your behalf to ensure they receive their payments as part of your debt repayment plan.
When working with your Chapter 11 lawyer on filing for bankruptcy to submit your petition to the courts, you must include a comprehensive list containing your business expenditures, sources of income, liabilities, assets and a statement of financial affairs. Once this is submitted to the court, your creditors will be placed in an automatic stay. This prevents them from temporarily engaging in collections actions including foreclosures, evictions, property seizures, bank levies and other activities while you work to create your debt repayment plan.
Debt Repayment Plan and Creditor Committee
Once your petition has been accepted by the court, you will collaborate with your Chapter 11 lawyer on filing for bankruptcy to develop your debt repayment plan. This allows you to restructure your business so that you can repay your debt with earned revenue to prevent your personal assets from being at risk. You can also continue with regular business operations while the repayment plan is in development. While you and your Chapter 11 lawyer have exclusive rights to present your plan to the courts within four months of your petition filing, the court can extend this deadline up to 18 months as requested, though this can be costly.
After you have submitted your repayment plan to the court, the judge in your case will form a creditor committee to review it. This allows your creditors the opportunity to provide input about the financial aspects of the debt repayment plan and how it is structured. This committee will be made up of the seven creditors that have the largest amount of unsecured debts against your business.
The terms of the debt repayment plan you develop with your Chapter 11 lawyer can be flexible if they are mutually agreed upon by you and your creditors. This can include modifications to payment dates and interest, as well as complete debt discharge. Once approved by the creditors and the court, your repayment plan will become a contract. Depending on the specifics involved in your situation, you will have six months to two years to meet the conditions of your debt repayment plan so that your case can be officially closed.
Chapter 11 Lawyers Will Help You Restructure Your Business Debts
While it has been an extremely challenging time as a small business owner, you do not have to face your trials and tribulations alone. With the help of Chapter 11 lawyers, you will receive the invaluable insights and guidance you need to discharge your debts so you can stay in business.
Contact us today to schedule a free consultation.
At CMC Law, we have the expert knowledge needed to win your case.