Many businesses in the Escondido area and throughout California did their best to get through the economic recession that hit the country several years ago. The recovery from those difficult times has been easier for some companies than it has been for others, however. Unfortunately, not every business has been able to remain profitable or get out from under overwhelming debt. For some companies it may be time to think about filing for Chapter 11 bankruptcy.
How does a Chapter 11 bankruptcy filing start? Well, the first step is to file a petition with the bankruptcy court. The petition needs to be accompanied by all of the requisite documents regarding the company's financial situation, such as information concerning current debts, liabilities and assets. Documenting revenue is important, as is providing the bankruptcy court with a full list of the contracts the company is currently a party to.
After the petition is filed and the filing fee is paid, the next step for the company is to submit a reorganization plan. After all, the key difference between filing for Chapter 11 bankruptcy and Chapter 7 - also known as "liquidation" bankruptcy - is that the company plans to stay in business, address debt problems and return the company to profitability. If a debt reorganization is not feasible or desired, the company may be able to file for Chapter 7 bankruptcy and close up shop.
A company will need to get as much information as possible about its unique financial circumstances before filing for Chapter 11 bankruptcy. The decision to file for business bankruptcy can seem like a leap of faith, but with proper planning and the right steps toward reorganization, the company just might be able to return to a stronger business model.
Source: www.uscourts.gov, "Reorganization Under the Bankruptcy Code," Accessed May 2, 2015