Experiencing a Chapter 11 Bankruptcy

Those who choose to file for Chapter 11 bankruptcy are often small businesses or partnerships that have fallen into financial distress and choose to reorganize or restructure their finances in order to keep the business operating and provide payment to their creditors. Filing for a Chapter 11 starts with a petition filed in the bankruptcy court. This type of bankruptcy is often filed voluntarily, with the debtor taking the action to relieve the bankruptcy problem but instances where the creditors gather and involuntarily file a Chapter 11 bankruptcy against the debtor can also happen. The petition should be filed to the bankruptcy court where the business is based and will be under the rules of that specific state it is registered to.

Although Chapter 11 bankruptcy is also open for big business and corporations, majority of those who file them are small businesses, LLCs, and corporations. There are pros and cons to choosing Chapter 11 bankruptcy; it provides time for the debtor to balance their income and expenses to recover profits and be able to continue their operation. However, Chapter 11 can also be risky, expensive, and time consuming for small businesses and individual business owners. According to the website of the Plano bankruptcy lawyers at Gagnon, Peacock & Vereeke, P.C., small businesses can avail of special provisions which could help them hasten the process and lower legal expenses.

In order to understand how these special provisions can help them through their bankruptcy would require the help of a bankruptcy lawyer adept in specific laws of your state. No disclosure statement is just one of the many special provisions that small business can avail through Chapter 11, allowing quicker reorganization process and scale down legal costs and other expenses. Likewise, small businesses are also given longer exclusive period for a proposed plan, extending up to 180 days compared with big businesses that only have 120 days for the liquidation of their business and assets. These, and other provisions, can be applied to small businesses that go through Chapter 11 bankruptcy.