Corporate bankruptcy Chapter 11 is a protection offered to companies that are going through financial distress.
In functional terms, this bankruptcy is quite similar to Chapter 13 because these both involve a repayment plan to meet debt obligations. But the key difference is that corporate bankruptcy is oriented towards businesses, while Chapter 13 is geared towards individuals.
Protect Your Florida Business with Chapter 11
In a situation of unmanageable debt, a Chapter 11 bankruptcy helps corporations remain in operation. This protection will allow your business to restructure secured as well as unsecured debt to an extent where your company can survive and gradually grow out of the balance debt.
This route is often chosen by companies that still have a viable and profitable business, but their debt obligations have significantly exceeded their operating revenues. Chapter 11 is the only option that allows a business owned by a corporation, LLC or a partnership to reorganize and restructure its debt and stay in operation.
Chapter 7 Bankruptcy Corporation
In some situations, a company may alternatively consider filing a corporate bankruptcy Chapter 7 (which is different from Chapter 7 personal bankruptcy). Filing a Chapter 7 bankruptcy, a corporation turns over its business to the trustee for liquidation.
Business operations will end, and the trustee will liquidate assets to pay for the business creditors. No exemptions are applicable in this bankruptcy, and the entire company can be liquidated. Once the liquidation has been completed and creditors paid from the proceeds, the business will not owe any remaining debts.
Advantages of Corporate Bankruptcy Chapter 11
Here are three key benefits of Chapter 11 corporate bankruptcy in Florida:
A Chance for the Business to Continue and Succeed
The business gets an opportunity to reorganize its operations as well as debts, a chance it might otherwise never have got. A business organization is anyway healthy for a financially crippled business.
With a Chapter 11 bankruptcy, the company has an opportunity to completely renew its structure and strategy, and find the right ways to improve cost and financial efficiencies. Over time, a business that survives in this manner could even gain a competitive edge over others because it has restructured its debts.
Renegotiation of Contracts Becomes a Possibility
A Chapter 11 bankruptcy corporation will have an opportunity to re-evaluate and renegotiate contracts. As the company embarks on a new journey of reorganization, it can start by rejecting or renegotiating cumbersome contracts. Suppliers, unions, and various other parties may fear termination of their contracts, which puts the debtor in an advantageous position to seek more favorable terms of the contract.
Ability to Escape or Repay the Debt
Clearly, the single most important benefit of a corporate bankruptcy for business is that it gives the business an ability to defer repayment of the debt, and even escape a part of the debt obligation.
Debt repayments could be temporarily put on hold with a Chapter 11 bankruptcy, while the debtor presents a debt reorganization plan where it will only pay a percentage of the total debt obligation.
Choose the Right Attorney to Guide You Through Corporate Bankruptcy Process
To make the right decisions about your corporate bankruptcy in Florida, make sure you have an experienced bankruptcy lawyer on your side. Trust the Lawyer of the Decade and the Largest Bankruptcy Firm in Florida! Call Patrick L. Cordero Law Offices today at 305-445-4855 or contact us online for a free consultation.