Thompson Law Group, P.C.

How do I maintain my business's operations while in debt?

Debt can be a very difficult hurdle for a Warrendale business to overcome. Though not all debts are necessarily fatal to businesses and corporations, too much debt can signify a problem with a business's operations. The failure of an entity to earn more than it spends can lead to the failure of the business and the closing of its doors.

Though not all businesses survive, some can find relief through bankruptcy. Particularly, Chapter 11 bankruptcy is a legal process that allows an entity to maintain its business operations while undergoing a restructuring and reorganization process that allows it to emerge with a plan to become profitable.

It is important to note that not all businesses will qualify for Chapter 11 bankruptcy, and, further, that not all businesses with experience the same outcomes after undergoing the process. Chapter 11 may not erase a business's debts and may leave it with significant financial obligations to repay. The business may end up closing if it cannot abide by the terms of its repayment plan and commit to the restructuring that its bankruptcy court approved.

However, one of the most beneficial parts of utilizing Chapter 11 bankruptcy for a business's debt problem is the opportunity for the business to continue to operate during the legal proceedings. Other forms of bankruptcy like Chapter 7 result in entities closing and selling off their assets in order to pay off their creditors; Chapter 11 bankruptcy helps businesses avoid that fate.

Readers of this legal blog are asked to seek counsel for their independent legal questions and inquiries. The information provided herein is not offered as legal advice but rather as a place for interested readers to be introduced to an otherwise deep and complex legal topic.

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