Chapter 11 bankruptcy is a federal court procedure for corporations or other business entities who seek to reorganize and restructure their affairs; usually downsizing and narrowing their focus.
The plan outlines how the business will repay their creditors either partially or in full, while offering full protection from said creditors.
Many times companies tend to overreach financially, expanding too quickly when they should maintain the status quo.
There are numerous factors which can contribute to the downturn of a business; poor money management, economic downturn, inept marketing, and even inadequate quality control on a product or service.
Whatever the reason, if the company wishes to stay afloat, Chapter 11 bankruptcy is a viable alternative.
In order to file, the individual or group must have received credit counseling from an approved credit counseling agency within at least 180 days prior to the date of said filing.
If the debtor's (group filing) bankruptcy petition was dismissed due to willful failure to appear before the court, failure to comply with the court, or was voluntarily dismissed from the court they cannot file for another 180 days.
Of course there are exceptions; emergency situations happen.
Sometimes it can be determined that there are insufficient approved agencies to provide required credit counseling.
A chapter 11 case begins with the filing of a petition with the bankruptcy court serving the area where the debtor has a domicile or residence.
A petition may be a voluntary petition.
Meaning it can be filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements.
Finding a business bankruptcy law firm that can guide the company through the process is an important step.
The firm should be knowledgeable and have the ability and know-how to focus on the representation of clients in all phases of the cases, receiverships, consensual restructure, and loan agreements.