Avoiding Major Setbacks During a Chapter 11 Bankruptcy So Your California Business Can Recover and Thrive

Los Angeles bankruptcy lawyers guide commercial enterprises through the reorganization process

Chapter 11 bankruptcy offers a golden opportunity to save your business from drowning in debt so it can move toward financial health. However, it is a complicated legal process, and an error can seriously reduce your chances of a successful resolution. Fortunately, the knowledgeable and experienced California Chapter 11 bankruptcy attorneys at the Law Offices of Michael Jay Berger provide the guidance you need to approach this form of debt relief with confidence.

Pre-filing mistakes

Chapter 11 bankruptcy requires careful planning and attention to detail in order to avoid such mistakes as:

• Filing too late after insolvency — The deeper in debt your business becomes before filing, the more likely it is that you will not be able to negotiate a suitable reorganization plan and will have to file for Chapter 7 liquidation, which means the end of your business.
• Inadequate documentation — When you file your petition, you must disclose information regarding assets, liabilities, income, expenditures and other financial matters. Failure to make a required disclosure could result in dismissal of your bankruptcy petition or the exclusion of certain creditors from the plan.  
• Incomplete asset evaluation — When you list your assets, you must include their current value. An incorrect figure could result in the valuation being challenged and a possible allegation of fraud.
• Critical pre-filing obligations — You need to make sure you’re eligible for filing the type of bankruptcy you choose, including completing a credit counseling course authorized by the court. 

Our knowledgeable advice and careful planning begin during your initial consultation, as we strive to put your bankruptcy on the right track from the start.

Financial management errors

Cashflow management and creditor relations can heavily impact the success or failure of a Chapter 11 business bankruptcy. Among the errors that can negatively affect your chances as a debtor in possession (DIP) of your business are:

• Inadequate working capital
• Poor budget forecasting
• Misuse of DIP financing
• Ignoring key creditors
• Missing payment deadlines.

We can guide you through your role, powers and obligations as a DIP at every step of the bankruptcy.

Management failures

As a DIP, you may continue to operate your business, but with that power comes the danger of managerial problems that can lead to struggles and potential failure of your Chapter 11 bankruptcy, including:

• Poor stakeholder management
• Ineffective decision making
• Inadequate employee communication
• Poor creditor updates
• Inconsistent messaging
• Maintaining pre-bankruptcy practices that contributed to your financial problems in the first place

These leadership issues, singly or in combination, can make it difficult for your business to earn the money needed to meet your financial obligations to your creditors under the Chapter 11 reorganization plan. While we can’t operate your business for you, we are ready to give you the benefit of our legal advice and experience and advocate for you when alleged problems threaten to derail the bankruptcy.

Choosing the wrong legal representation

With all of these potential pitfalls ready to trip up your efforts to restore your business to financial health, choosing the right Chapter 11 bankruptcy lawyer is essential. At our firm, you’ll benefit from working with a Certified California Bankruptcy Specialist with the top peer review rating from Martindale-Hubbell.  

Contact an accomplished California lawyer for Chapter 11 bankruptcy

Based in Beverly Hills, the Law Offices of Michael Jay Berger helps our clients avoid the pitfalls of Chapter 11 bankruptcy proceedings throughout Southern California. Call our firm at 310-271-6223 or contact us online for a free consultation.