Chapter 11 Bankruptcy: Debt Relief for Businesses and Their Owners

Business bankruptcy filings are most often done using a Chapter 11 bankruptcy. Filing for bankruptcy under the Chapter 11 code allows for a business to reorganize its accumulated debt in a process which aims to have the business continue operations while paying specified creditors and having other debts discharged.

Types of Businesses

Sole proprietors, partnerships, and corporations can file chapter 11 bankruptcy. Chapter 11 bankruptcies are usually extremely complex and are best executed by experienced business bankruptcy attorneys. The complexities involved include the possibility of bankruptcy court intervention in the business, distribution of assets, and forensic accounting to determine cash flows. For these reasons, having an experienced Chapter 11 bankruptcy on your side from the beginning is an absolute necessity.

Debtor in Possession

The owners of a business filing bankruptcy act as their own trustee in most cases.  A "Debtor In Possession" situation normally has business assets retained by the company until after the bankruptcy process is completed. One of the first hurdles for a business is the court’s determination of whether some sort of intervention is appropriate. If the court feels that mismanagement, illegal activities, or any type of misleading accounting practices are present, a trustee of the court can be appointed to oversee operations. Depending on the level of the court’s concerns, an outside trustee can also be appointed to be involved directly with operations of the business on a day to day basis, a virtual nightmare for a business owner.

Avoiding Legal Issues

Businesses represented by Chapter 11 bankruptcy attorneys stand a much better chance of avoiding these situations by presenting as clear a picture as possible into the operations and books of the companies. The knowledge of bankruptcy law information, the organization of company records, and concise documentation of company cash flows can ease the concerns of the bankruptcy court and minimize outside influence from court-appointed trustees. These are all actions which should be undertaken by a business bankruptcy attorney because any errors or vagaries can lead to the court’s mistrust of the business, followed by actions by the court to see the company’s operation with their own eyes.

If you are contemplating a Chapter 11 bankruptcy filing, do not go it alone. Consult with an experienced Chapter11 bankruptcy attorney to ensure that your get business gets the best outcome possible. The Law Offices of Zhou & Chini handle all types of bankruptcies, from the simplest chapter 7 to the most complex Chapter 11 business bankruptcy. Please call us at (800) 972-9600 or visit www.ZhouChiniLaw.com