Realizing you need to file Chapter 11 bankruptcy to get control of your company’s finances can be a complex, lengthy, and often nerve-racking process. The first step in filing Chapter 11 is to understand the process and prepare for it.
What is the Purpose of Chapter 11?
The main goal of filing for Chapter 11 is for a company to receive assistance in reorganizing their finances and to preserve the going concern value of an operating business. This allows for a decision to be made by the company’s creditors and equity holders (or, if necessary, the Bankruptcy Court) on how such going concern value will be shared, distributed, or reallocated.
Is my Business Eligible?
If there is a viable core business still functioning that can be preserved upon assistance or alleviation from creditor collection activity, a company can consider this route. Businesses with significant equity in assets that will be lost to repossession or foreclosure are also prime candidates for protection until this section.
How Do I Get Started?
First, hire an experienced Chapter 11 attorney or firm (Culhane Meadows has offices in Atlanta, Austin, Dallas, New York, and Washington D.C.). You will need to work in conjunction with the lawyer or firm to prepare your petition by completing a list of all of your company’s assets, debts, income, and expenses with a summary of your finances. When ready, the petition can be filed with the bankruptcy clerk’s office. In most cases, filing triggers an “automatic stay” (a federal injunction) which stops all collection activity for the time being, unless otherwise indicated from the bankruptcy judge. It is best to continue the ordinary course of business prior to filing.
Each Chapter 11 filing is unique and should be treated as such. Our full service law firm offers the highest quality legal services to offer the best resolution to each and every client.