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Basic Steps in a Chapter 11 Case for Small and Mid‑Sized Businesses
Chapter 11 is a court-supervised process that allows financially distressed small and mid-sized businesses to restructure their debt, continue operating and develop a viable path to financially stable ground. The business ordinarily remains in control of its operations as a “debtor in possession,” but there are reporting and fiduciary responsibilities, and certain decisions require courts […]
How a Small Business Can Build a Feasible Subchapter V Plan
Subchapter V bankruptcy is a streamlined form of Chapter 11, designed to give troubled small businesses a faster, more affordable path to reorganize their debts and emerge solvent. Unlike in a traditional Chapter 11, there is no requirement that creditors approve a Subchapter V plan. However, the bankruptcy court must confirm the plan, which it […]
What Executives Should Expect in the First 30 Days of a Chapter 11 Case
The first month of a Chapter 11 case can be the most demanding phase. Company executives must secure access to cash, protect essential business relationships and establish the strategic direction of the case. Decisions made during the first 30 days can ultimately determine whether the company continues operating and regains its momentum or enters into […]
Tools Mid‑Sized Companies Can Use to Restructure Debt in Chapter 11
Rising interest rates, equipment payments, real estate loans or a temporary decline in revenue can leave an otherwise viable business unable to keep up with its debts. When individual negotiations with creditors are no longer enough, Chapter 11 can serve as a lifeline, letting the business modify secured loans, exchange debt for equity, sell assets […]
Using Chapter 11 to Reshape Unworkable Agreements
There are many reasons why a once-thriving business might end up in financial straits. One of these may be that longstanding contracts that once made good sense have become burdensome as financial conditions have changed. Above-market lease payments, expensive supplier contracts or unfavorable service agreements can drain cash flow and threaten a company’s solvency. When […]
Chapter 11 Strategies to Help Medium-Sized Businesses Survive
A medium-sized business can encounter financial problems even when it is not truly insolvent. Despite having loyal customers, valuable assets and strong long-term prospects, a company may struggle because of rising operating costs, expensive leases and contracts and aggressive collection efforts by certain creditors. When these financial problems start to interfere with a company’s growth […]
How Chapter 11 Gives Businesses Leverage in Negotiation
It is rarely easy for a struggling business to negotiate with its creditors. After all, creditors care about getting paid, not what a business has to do to make that happen. As a result, creditors may demand immediate payment on past-due bills, threaten lawsuits over unpaid accounts or pursue collection actions. Chapter 11 changes that […]
The Value of Nonconsensual Plan Confirmation in Subchapter V
A Subchapter V proceeding is a streamlined form of small-business bankruptcy that helps owners quickly reorganize their debts and keep the business operating. One of the most significant advantages of Subchapter V is that a small business does not necessarily need creditor approval for a reorganization plan to be confirmed by the court. Traditional Chapter […]
Selling Assets of a Distressed Business Through Section 363
During a Chapter 11 proceeding, a debtor that continues to operate the business and control company assets may seek court approval for a Section 363 sale. This court-supervised auction process allows the debtor-in-possession (DIP) to sell selected assets quickly, free and clear of liens, claims and other encumbrances — something that is often difficult or […]
What Chapter 11 Filers Should Know About Personal Liability
Unless a business is established as a sole proprietorship or general partnership, owners typically can avoid personal liability for most business debts. If a corporation or limited liability company (LLC) files a Chapter 11 bankruptcy, owners generally do not put their personal assets at risk. There are exceptions, however. Personal liability may still attach in […]
