Bankruptcy and Business

The thrill of turning a unique idea for a product or service into a fixture of people’s lives has a strong appeal for those of an entrepreneurial spirit. They envision a world improved by the work that they will do and most typically there is a degree of expectation that for their efforts, they will be greatly rewarded with accolades and financial windfalls.

The disheartening reality, however, is that roughly one-third of new business ventures will fail within two years and more than half will close within five. Betting on success, many business owners take on more debt than they can adequately manage with the revenue that their company is producing.

This imbalance can fell an enterprise before it even gets off the ground. Chapter 11 of the United States Bankruptcy Code offers a corporation the opportunity to restructure its debts and reorganize its business model, all while continuing to conduct business. Contact the Arizona bankruptcy lawyers of the Harmon Law Office, L.L.C. at 480-829-0494 to learn more about your options.

The Advantages of Chapter 11

When people imagine the impact of a bankruptcy filing, they tend to envision the execution of a Chapter 7 case. Under Chapter 7, a business (or individual) asserts that it has become insolvent and the assets of the company are liquidated in a sale, the proceeds of which are distributed to creditors in a proportional manner. This effectively terminates a company.

Under Chapter 11, however, there is no such liquidation required and the debts are not vacated. Instead, a company is given the chance to prove its viability under slightly modified circumstances. Some of the advantages of Chapter 11 are:

• Companies may obtain more favorable rates on new loans
• Companies may renegotiate the terms of existing repayment agreements
• Legal actions against the business are halted during the period of protection
• Contracts may be rejected or cancelled altogether without adverse legal effect
• Successful completion of a bankruptcy plan allows a company to resume without restriction

Contact Us

Maybe the market hit a rough patch, or maybe you got caught up by predatory lenders. Either way, the current difficulties that your company is facing do not mean that you must give up on your idea. Contact the Arizona bankruptcy lawyers of the Harmon Law Office, L.L.C. at 480-829-0494.