Chapter 11 Bankruptcy

Chapter 11 bankruptcy is sometimes referred to as reorganization bankruptcy. It allows a business to continue operations while the business makes a plan to repay or discharge its debts. The plans are designed to keep the business operational during and following the bankruptcy process.

A lot of people think of Chapter 11 bankruptcy as only for big businesses. However, small business owners who want to keep a business running but need some debt relief may also benefit from filing for Chapter 11. Most small business owners who want to continue running their businesses will maintain ownership of their operations during the bankruptcy process.

During bankruptcy proceedings, a business remains operational and the business owner can continue to make most decisions about how to maximize sales and profit for the business. The business can sell inventory and is generally free to purchase materials to complete new contracts.

However, small business owners face some important limitations. For example, they must seek permission to sell assets (except inventory) and to start or end rental contracts. The court also must approve the employment of lawyers or other service providers in connection with the bankruptcy.

Business owners also have to provide monthly reports that keep the courts informed of the business’s financial situation. Reports generally include business income and an expense report.

Contact Kurt O'Keefe at 313-962-4630 so you can get your questions answered and get your life moving back in the right direction.