Positive Sides of Chapter 11 Bankruptcy

Posted by on Jan 8, 2017 in Bankruptcy | 0 comments

When a layman hears the word bankruptcy, he or she automatically relates it to something negative. After all, bankruptcy basically means that an individual or company cannot pay the outstanding debts, so that must mean bad news.

Bankruptcy opens an opportunity to start over, by forgiving debts and allowing repayments in the form of the individual or company’s assets that are available for liquidation. It can have a positive effect on the economy. Since the bankrupt individuals and companies are given the second chance, they can possibly continue their operations and help in the flow of money and other assets in our society.

There are several chapters in the Bankruptcy Code, and one of them is Chapter 11. According to an article from the Bradford Law Offices, PLLC website, Chapter 11 Bankruptcy allows businesses to continue operating under court supervision and keep all possessions and assets.

The goal of the chapter is to make the company profitable again through reorganization. The debtor should create a new or remodeled profitable plan for the business, and this plan will be approved by the creditors committee before it can be implemented.

According to another informative article on the same website, the following are the other benefits of Chapter 11 Bankruptcy:

  • Continued operations while paying off debts
  • Allowed partial pay back of unsecured debts
  • Freedom from harassing creditors that contact you at home or busines premises
  • Freedom to restructure secured debts for lower and much longer payments
  • No debts can be considered non dischargeable

It is important to stress that these are all strictly regulated by court, and the failure to comply in payments and other agreements can be a legitimate reason to dismiss your case and turn it into a different kind of bankruptcy.

In this fluctuating economy, you may be more prone to bankruptcy, especially if your business has a high start-up cost and an unreliable revenue source. If things get rough, don’t be afraid to pursue a Chapter 11 bankruptcy. It may even be the very thing that saves you and your company from total destruction.

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