When businesses find themselves unable to keep up with their financial obligations, filing a commercial bankruptcy can help reduce or eliminate their debts. A business bankruptcy attorney at Brooklyn, NY based Rosenberg, Musso & Weiner can help you determine if filing is the right debt reduction strategy for your company.
Business Bankruptcy Choices
There are several chapters in the bankruptcy code that are commonly used by business filers. For companies who want to reorganize, Chapter 11 is commonly selected. For companies who don’t have the capacity to repay debts over time, a Chapter 7 filing is often commenced.
Most commercial bankruptcy filings are voluntary. However, there may be times when creditors petition the courts to bring an involuntary commercial bankruptcy action against a debtor company to ensure a fair distribution of assets.
Business Chapter 11
Chapter 11 is the most common reorganization chapter filed by businesses. In this chapter, the commercial debtor stays in business throughout the proceedings. Once the petition is filed, the automatic stay comes into effect where creditors are prevented from taking any action to collect debts and allows the debtor to cure defaults in leases and secured debt. The company develops a detailed reorganization plan which outlines exactly how the company will operate while they continue to make debt payments to creditors. The plan must be approved by the bankruptcy court, but in order to meet approval, the company may have to negotiate with or take suggestions from creditors. Often settlements can be reached with creditors where they accept a percentage of the total debt owed.
A business bankruptcy attorney at our Brooklyn, NY law firm can help you determine whether a Chapter 11 reorganization is the best solution for your company.
Business Chapter 7
If a company does not want to, or cannot realistically complete a Chapter 11 reorganization, they may choose to file for Chapter 7 or liquidation instead. In this chapter, an automatic stay also begins right after filing, which prevents creditors from any debt collection actions. A trustee is appointed to manage the proceeding and sell the company’s assets to repay part of all of the debts. Often upon filing the trustee will close the business and take possession of its assets.
If your company is experiencing severe financial problems, call 718-855-6840 or schedule an appointment online with a Brooklyn, NY based business bankruptcy attorney at Rosenberg, Musso and Weiner. They will analyze your financial situation and help you determine is filing a commercial bankruptcy is the best strategy for your company.