Business owners who find themselves struggling to keep their business running may consider filing for financial relief with a Chapter 11 bankruptcy petition. The process generally begins by filing a petition with the bankruptcy court. In addition to the court filing, the applicant will likely need to provide additional paperwork such as schedules of assets and liabilities as well as a statement of financial affairs.
If approved, the process generally ends in one of three ways:
- Dismissal. The case may be dismissed before it even begins if the business fails to follow proper protocol when putting together its petition. Common errors that result in dismissal include a failure to file proper paperwork, to meet required due dates or to pay filing fees.
- Conversion. Those leading the bankruptcy petition may consider converting the Chapter 11 restructuring plan into a Chapter 7 discharge if the business continues to suffer from substantial or continuing loss and appears unlikely to recover.
- Successful reorganization. If the plan is structured and executed wisely, the business may successfully complete the bankruptcy process and move on with future business plans. The case generally closes once the business meets its obligations under the plan for the outlined time period and the bankruptcy court issues final decree.
Navigating a Chapter 11 bankruptcy is complex. An attorney experienced in this niche area of the law can provide guidance to better ensure a successful reorganization. This legal professional can also review your business’ situation and discuss alternative options to help your business regain its financial footing.