Should I file Chapter 11 for my business?
Posted on Mar 28, 2009 in Alternatives to Bankruptcy, Business Bankruptcy
Chapter 11 is used to help businesses reorganize. It continues to be an important tool. There are many important options which a small business and even a medium sized business should consider when facing financial difficulties.
Is the business fundamentally sound?
If the business continues to be viable, think about what went wrong. Think about how it could be fixed. Think what the business would look like if you fixed it. Then think about whether your creditors are better off if your business is fixed and continues to be viable. If you can think positively about all of these questions, and if you have some cash to fund the reorganization of your business, Chapter 11 can still be a good idea. There are some down-sides to chapter 11:
- It costs a lot
- There is court supervision
- You have to pay for the expenses of administering the case – even the costs of people who may oppose your efforts.
Alternatives to Chapter 11
There are several alternatives to chapter 11. Lakelaw handles all of these for small and medium sized corporations, limited liability companies and other business forms:
- Assignment for the benefit of creditors – followed by restructuring under a different management
- Informal composition with creditors
- Chapter 128 Receivership in Wisconsin
Liquidation of the Business
In the event that you feel that your business can’t be saved, there are many possibilities. Bankruptcy under chapter 7 is only one possibility. Here are some others:
- Liquidation under chapter 7
- Dissolution and liquidation under state corporate law
- Informal liquidation without dissolution under state corporate law
- Sale of all assets by secured creditor under the Uniform Commercial Code
Each of these vehicles has upside and downside. So when in doubt, call us and we’ll evaluate your particular situation and then help you make the right choice for you and your business.