What will happen to my business if it enters bankruptcy?

This will depend on the unique circumstances of your businesses’ finances as well as your own personal goals as a business owner.  Most businesses enter Chapter 11 bankruptcy with an eye to rehabilitating their finances by restructuring debts and assets.  In many cases, businesses emerge in a stronger financial condition than before declaring bankruptcy.

You can expect the following during a Chapter 11 business bankruptcy:

  • A voluntary petition will be filed with the court to initiate a Chapter 11 bankruptcy case
  • A schedule of assets and liabilities as well as a statement of financial affairs will be filed as part of the Chapter 11 filing
  • You will remain in possession and control of the business property and operations while developing a plan to restructure and pay your business’ debts; this may include one or more sales of excess assets, or spinning out a division of the company
  • A committee of creditors may be appointed to represent the interests of general creditors during the case
  • If the process is successful, your business will emerge from bankruptcy with a plan in place to pay off its creditors over time while you continue to operate your business under its new structure