Tag Archives: Chapter11

Over the years I have been asked that question many times.  Some business folks just think when your business is deep in debt, that a bankruptcy, particularly Chapter 11, is the only way out.  That’s just not always true by any stretch. A Primer on Chapter 11 The Good, the Bad and the Maybe On the bright side, most businesses that file Chapter 11 do so under threat of or actual, litigation.  Sometimes there are lots of pending lawsuits. They may be scattered in several states or many counties in the same state.  Multiple law firms engaged to defend the company can be a severe drain on an already impaired cash flow. Chapter 11 stops most litigation in its tracks.  Chapter 11 allows a business to stop paying the unsecured debts accumulated prior to filing until there is a plan in place to pay all or part of the ‘pre-filing’ debts.  Chapter 11 prevents landlords from reclaiming their premises, stops equipment financiers from reclaiming their equipment, stops bank foreclosures on the business real estate and most other types of asset seizures. It can even orchestrate the return of assets already seized.  Chapter 11 can allow a business time to formulate a plan to repay all or part of what it owes. If the company can’t pay all it owes, it can usually pay less, sometimes much less, and still survive.  It stops the accrual of interest on unsecured debts. Chapter 11 allows a company to reduce liens on property to the actual value of the property…