When business slows down, it is common practice for companies to issue layoffs and search for ways to save costs while continuing to pay creditors. Businesses can quickly become stuck in debt, and owners may feel there is no way out. Being aware of all available options can help businesses retake control of their company from a difficult financial situation.
One option business owners should consider is filing for a Chapter 11 bankruptcy, as it can provide many benefits.
Take the example of Family Christian Stores, a major bookstore chain that operates 266 locations in 36 states. By filing for Chapter 11 bankruptcy, Family Christian Stores was allowed to keep its doors open and continue serving customers. Even though the company was facing a difficult financial situation, an announcement to the press mentioned that the chain would not be issuing layoffs.
What Are the Benefits of Filing for a Chapter 11 Bankruptcy?
Chapter 11 bankruptcies have several benefits, but the most important benefit is that it allows you to take back control of your business from your creditors.
- Filing for a Chapter 11 bankruptcy can allow business owners to restructure payments that they are having difficulty repaying. Creditors do not want to lose money when a borrower declares bankruptcy, and the threat of doing so can push them into a more favorable repayment plan.
- Business owners can continue operations while stopping any collection activity or active litigation against them. This means that you are in control of your business again, and not the debt you owe.
- Chapter 11 repayment plans can last for 10 years, giving a business owner adequate time to settle debts.
The Sader Law Firm has decades of experience helping businesses stuck in difficult financial situations. We encourage our readers to contact us with questions regarding their case.
The Sader Law Firm – Kansas City Attorneys