Did you know that you do not have to close down your company even after declaring bankruptcy? By filing Chapter 11, you can stay afloat by restructuring the company’s debts and obligations. So, while you may not have total control of the company, operations will resume as usual, and things may even get better ahead.
Several large corporations like General Motors and United Airlines have filed for Chapter 11 bankruptcy at a point in time. Still, there are numerous misconceptions about the whole process. For example, some people think it is a silver bullet for their company’s financial troubles, while others choose to avoid it at all costs. Here are some common misunderstandings people have about a Chapter 11 bankruptcy.
Your business will shut down
The aim of Chapter 11 is to streamline operations and reorganize debt, not liquidate the business. This will allow you more time to develop and implement a plan while retaining some control over your business.
Filing for bankruptcy means failure
Bankruptcy does not always translate to failure. A court-supervised restructuring could be what your company needs to get everything back on its feet. It is possible to bounce back from bankruptcy and start to become profitable.
It is a complex and tedious process
While it may involve more paperwork or stages, navigating a Chapter 11 bankruptcy is not as complicated as people perceive it to be. With the proper preparation and knowledge about how everything works, it does not have to be a very long wait to get everything finalized.
What you need to know
It may be difficult for you when declaring bankruptcy is the only option left for your company. However, you need to make the right decisions depending on the specific circumstances of your business.