What You Need to Know About Chapter 11 Bankruptcy
Owning and managing a business can be difficult, especially in a changing economy. It is not uncommon for businesses to experience a decrease in profits, leaving them unable to meet their financial obligations. Chapter 11 bankruptcy may be a viable options for struggling Florida businesses to reorganize their debt and potentially continue operations. Here’s what you need to know about this type of business bankruptcy.
What is Chapter 11 Bankruptcy?
Unlike other bankruptcy chapters, this type of bankruptcy is almost exclusively designed for business debt. Once a chapter 11 bankruptcy is filed, a business owner has four months to propose a restructuring of its affairs that allows the business to satisfy debts and meet financial obligations. Essentially, this type of bankruptcy is a plan recognized by the court for how the business will continue to operate in the future.
Who Can File For Chapter 11 Bankruptcy?
In some rare cases, Chapter 11 bankruptcy is filed by an individual. However, the majority of filers of this type of bankruptcy include limited liability companies, corporations, partnerships and other businesses. Although it is more typical for a business to seek out bankruptcy on its own as a result of overwhelming debt, it is possible that a group of creditors will get together and petition to file an involuntary Chapter 11 bankruptcy against a business who has defaulted on their financial obligations.
What Will Happen to the Business?
In almost all cases, a debtor is able to continue to operate their business as usual. They are considered the “debtor in possession” of the business. However, if a court determines the debtor in possession to be untrustworthy to continue running the business, a trustee may be appointed to do so instead. A court will usually only appoint a trustee in situations where the debtor has shown to grossly mismanage the business’ affairs, or in cases of fraud.
What Can a Bankruptcy Court Do to the Business?
Once you file for chapter 11 bankruptcy in Florida, the court presides over most decisions regarding the business and its affairs. For example, a court will decide if any assets will be sold or if the business should be expanded or shut down. The court will also deal with issues of leases, mortgages, payments to professionals and contracts.
Do I Need a Florida Chapter 11 Bankruptcy Attorney
If your business is struggling with meeting its financial obligations, a chapter 11 bankruptcy may be in the best interest of yourself and your business. Due to the complexity of this type of bankruptcy filing, it is crucial that you discuss your case with a qualified Florida Chapter 11 bankruptcy lawyer. At the Law Firm of Joel M. Aresty, P.A., we have the skills and experience to assist your business. Contact us today at 1-855-DOC-LAWS. We will meet with you and help you determine the best way to move forward.