How Your Business Could Qualify for a Prepackaged Bankruptcy
Each business is in a different situation and has different needs when contemplating an Arizona bankruptcy filing. Some businesses can complete a pre-packaged bankruptcy filing to move through the process quicker. Only with the recommendation from a skilled Arizona bankruptcy attorney should you choose to file this way.
Defining a pre-packaged bankruptcy
In a pre-packaged bankruptcy, the business that is filing for bankruptcy works through getting creditors on board with the concept before filing paperwork with the courts. Cooperating with the business’s creditors, the company files a plan for reorganization.
If the company has shareholders, those shareholders must vote on the reorganization plan before filing for the bankruptcy with the courts. The main benefit of filing a pre-packaged bankruptcy deal is that it can make the process go faster so that you can get back to business and growing your company.
Before considering this option, be sure to talk to an Arizona bankruptcy attorney. Your attorney will review all the information related to your situation and advise back on a good course of action for you and your business. In some cases, a standard bankruptcy filing makes more sense.
Can Chapter 11 bankruptcy help my business?
Economic downturns or changes in the marketplace can hurt businesses financially. Whether it’s paying your taxes, fulfilling payroll or paying off the debts that you owe that is making things look bleak, a chapter 11 Arizona bankruptcy filing might help.
When you fall too far behind in your payments for various commitments, catching up becomes impossible without bankruptcy. In chapter 11, you restructure your debt to make it manageable and allow yourself time to regroup and get back on track.
Click here for Wikipedia’s explanation of a pre-packaged insolvency.
How to file for chapter 11 bankruptcy in Arizona
Chapter 11 bankruptcy normally indicates that a business that is a partnership, corporation or limited liability company is the debtor that is filing for reorganization. In some rare circumstances, an individual might make too much money to file for chapter 7 or chapter 13 bankruptcy and then be eligible for chapter 11.
A chapter 11 bankruptcy begins with filing a petition with the courts for bankruptcy. Most often, these filings are completed by the debtor. However, in rare cases, creditors can file for what the courts call an “involuntary” bankruptcy when the debtor is not paying on a loan.
What happens to my business during a chapter 11 bankruptcy filing?
During chapter 11 bankruptcy, the courts do not assign a trustee like they do in chapter 7 bankruptcy. This means that the business is permitted to continue its day-to-day operations like normal.
However, if the courts believe that the debtor is guilty of fraud, gross mismanagement or other errors, the court might then appoint a trustee to oversee the financials of the business.
The business cannot make major decisions while undergoing a bankruptcy filing. These major decisions might include:
- Sale or redistribution of assets, such as real property or inventory
- Obtaining a new lease or breaking a current lease outside of its normal terms
- Filing for a new mortgage or other new debt
- Discontinuing business operations or closing down shop
- Entering new ventures or otherwise expanding into new business operations
- Making changes to contracts or entering new agreements for vendors, unions, etc.
Your Arizona bankruptcy attorney can advise on other information you should be aware of before filing for chapter 11 bankruptcy. While filing for bankruptcy can solve some problems, you should know in-depth what it will mean for your business and for your future. Discuss all possibilities with your attorney and then work together as a team to create an accurate and appropriate Arizona bankruptcy filing.
Click here for information on creditors rights and bankruptcy in Arizona.