Bankruptcy protections are available to many businesses in much the same way as they are to individuals, with the important addition of Chapter 11. A Boston business formation attorney can help you discern whether bankruptcy is right for your company, but the following provides a brief outline of its features.
Chapter 7 vs. Chapter 11
Chapter 11 is a means of reorganization that allows a business to continue operations. Chapter 7 is designed for individuals and companies that no longer have reasonable hope of getting back on their feet and paying off indebtedness. The U.S. Bankruptcy Court will arrange to have the assets distributed among the creditors.
How Chapter 11 Works
A Boston business formation attorney will work with the business owner to file and reorganize under Chapter 11. As soon as the filing takes place, any collections efforts in place legally are required to cease. The owner(s) of the company then put together a plan for reorganization that is submitted to the court that includes a strategy for avoiding problems in the future.
Chapter 11 reorganizations are not restricted to smaller businesses; some of the largest corporations in the nation have filed and successfully re-emerged, such as Delta Airlines and General Motors. Indeed, even some cities are filing for reorganization as they seek a means of surviving the Great Recession.
For Further Information
If you are considering filing a form of bankruptcy for your business, it is in your best interests to have the legal expertise of a Boston business formation lawyer to assist. Call Ionson Law to arrange a meeting at (781) 674-2562.