Dealing with financial difficulties at a commercial enterprise is never easy, but it can become even more stressful when you don’t know your next steps. At Stok Folk + Kon, our dedicated bankruptcy attorneys will provide you with quality legal representation. We will work hard to protect your assets to the maximum extent possible under the law. Our extensive knowledge of bankruptcy law and the related financial issues can help you decide whether it is the right choice for your business.Filing for Chapter 11
A typical Chapter 11 bankruptcy situation arises when a business is generating money but is in financial trouble, sometimes because of incurring too much debt. This process gives the managers of the enterprise an opportunity to restructure some of its secured debt and to discount unsecured debt to keep the business intact.
Once a Chapter 11 bankruptcy is sought, the debtor must provide a repayment plan that is acceptable to the court and the relevant creditors. If the plan is accepted, the business in debt can restructure its finances over a period of three to five years without having to close down due to financial difficulties. Thus, Chapter 11 allows the entity to reorganize by reducing what it owes and paying off creditors over time. This is typically done under the supervision of a court-appointed trustee, although the regular management of the business is still generally responsible for its day-to-day operations.
In Chapter 11 proceedings, there are three kinds of repayment claims: priority claims, secured claims, and unsecured claims. Priority claims refer to extremely important creditors that must be paid in full. Taxes and bankruptcy proceeding costs fall in this category. Secured claims include those for which a creditor can take backup collateral if the debt is not paid off. Unsecured claims refer to situations where the creditor cannot take any property owned by the debtor. Unsecured claims are not required to be paid in full as long as the debtor pays off some disposable income over the period of three to five years. The amount of disposable income a debtor has to pay to unsecured creditors depends on the details of the case.
There are a number of potential reasons why business management might choose to file a Chapter 11 bankruptcy claim, such as:
- Remaining operational while the business is being restructured;
- Protecting assets that would otherwise be subject to liquidation; and
- Having the opportunity to spread out the payment of debts and taxes over time.
- It is important to speak to an experienced attorney about which aspects of this process would apply to your situation.
Making the decision to file for bankruptcy is never easy, but sometimes it may be the right choice for the financial future of your enterprise. The experienced commercial bankruptcy lawyers at Stok Folk + Kon will work diligently to help protect your assets. We understand that financial difficulty can hamper the success of your business in both the short term and the long term. If you need the services of a capable legal professional, call us today at 305-935-4440 or contact us online to set up an appointment. Our clients from Hollywood, Fort Lauderdale, and other Florida communities.