If you know that your company cannot afford its current debt total, you may assume that you’ve merely reached the end of the line. You have to declare bankruptcy, sell your assets, let your staff go and close down the company, right?
Or is there another option? Is there a way to use bankruptcy and keep your business open and operating, just as it was before?
The benefits of Chapter 11
What you’re thinking of is Chapter 11 bankruptcy. Commonly called reorganization bankruptcy, it does not require you to close. You typically retain possession of your business and you can continue daily operations, even while going through the bankruptcy process.
In fact, the courts can even approve new loans. You may be in the process of consolidating and altering your current debt, but you can still get access to funds that you need to keep the business open. Bankruptcy is far from the end of the line and far from the end of your business.
Much of the time, the real goal is just to make debt affordable. You may not be able to pay your debt as it is currently structured, but your company is still making money. You still have income. Bankruptcy can help you set things up so that your finances work and the company can succeed.
Exploring your bankruptcy options
As you can see, it’s definitely worth exploring all of your options when being pursued by debt collectors. Consider them carefully to see what will be best for your business. The more you know about the process, the easier it is to decide what is right for you.