Chapter 11 Bankruptcy for Businesses in Massachusetts
In the case of a business in Massachusetts, filing Chapter 11 enables the business to remain open while allowing creditors to work out a repayment plan. This can be beneficial to all parties involved, as it allows the business to continue operations and creditors to receive payments on debts. This type of restructuring also provides protection from creditors and other debtors and helps the company to address its financial issues and reorganize.
What is the purpose of a Chapter 11 filing by a business?
Filing for Chapter 11 bankruptcy is an important decision for businesses facing cash flow issues and potential default. This form of bankruptcy protection allows companies to restructure their debt obligations, negotiate with creditors, and potentially avoid forced liquidation. Owners can use Chapter 11 to protect their business from being taken over by creditors and opt to file
Chapter 7 if they want to get on with their lives. Regardless of the circumstances, it’s important to consider all available options before making a decision.
In conclusion, filing Chapter 11 bankruptcy is often the best option for business owners when they cannot keep the company. It allows them to remain in control, explore the full range of options, reduce liability, and possibly emerge from bankruptcy with a reorganized debtor. However, they should be aware of the personally-guaranteed debt they may have to pay down before the bankruptcy, even if certain payments can be reversed.
Chapter 11 Bankruptcy MA: What You Need to Know
If your business is facing financial difficulties, Chapter 11 bankruptcy filed by an attorney near me may be an option to help you reorganize and stay afloat. Chapter 11 in Massachusetts is a form of bankruptcy that involves restructuring a debtor’s business, debts, and assets and is often referred to as “reorganization” bankruptcy. Many large corporations such as General Motors, K-Mart, and United Airlines have used Chapter 11 bankruptcies to restructure their debts and remain in business.
Understanding Chapter 11 in Massachusetts
Chapter 11 bankruptcy is the most complex and expensive form of bankruptcy proceeding. It is usually reserved for corporations and other large entities, but in some cases, individuals with a lot of debt may also be eligible for Chapter 11. The process can be lengthy and costly, but it does allow a business to remain in operation and reorganize its assets and debts. The debtor, also known as the “debtor in possession,” is allowed to run the business as usual, but certain decisions may require the court’s approval.
These include the sale of assets other than inventory, starting or terminating a rental agreement, and stopping or expanding business operations. If the debtor opts to propose a reorganization plan, it must be in the best interest of the creditors. If the debtor fails to propose a plan, the creditors may do so instead. The Small Business Reorganization Act of 2019, which went into effect on February 19, 2020, added a new subchapter V to Chapter 11 designed to make bankruptcy easier for small businesses. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law by the President on March 27, 2020, raised the Chapter 11 subchapter V debt limit to $7,500,000.
Advantages & Disadvantages of Filing Chapter 11
The primary advantage of Chapter 11 is that the business is allowed to remain open and generate cash flow, which can be put towards repaying debts. It also provides some protection from creditors. The biggest disadvantages are that the process can be lengthy and expensive. Additionally, the court must approve the reorganization plan and be manageable enough for the business to reasonably pay off the debt over time.