Limitations of Chapter 11 Bankruptcy

A Chapter 11 bankruptcy, or business reorganization, is a way for companies that are deeply in debt to continue operations while repaying their creditors. Business owners choose this route for many reasons, including the chance to end calls from creditors, restore their credit, and save jobs. Unfortunately, Chapter 11 cannot solve every problem.

If your business is seriously struggling and you are thinking about bankruptcy, the experienced attorneys of the Harmon Law Office, LLC can help. Our dedicated Arizona Chapter 11 bankruptcy lawyers can help you negotiate with creditors, develop a repayment plan, and work your way out of debt. To learn more, call our offices at 480-829-0494.

Chapter 11 Bankruptcy: Potential Downsides

Before filing for bankruptcy, you need to have realistic expectations for how it may and may not help your company. Some unfortunate truths to bear in mind include:

• Limited freedom to run your company. Unless the courts find evidence of fraud, you will be left in charge of your business’s daily operations. However, any major sales or purchases must be approved by the court overseeing your case.
• Severe consequences for not following the repayment plan. If you fall behind on payments during the Chapter 11 bankruptcy process, your creditors can petition to have your bankruptcy changed to Chapter 7. This will mean selling your business, or closing it down entirely, in order to repay your debts.
• Avoiding layoffs may not be possible. Filing under Chapter 11 can be expensive; it is often difficult to get debts discharged, and you will be responsible for attorneys’ fees. Sadly, as a result of filing for Chapter 11, businesses sometimes have to close branches, lay off employees, and take other undesirable measures to stay in business.

If you are unsure whether this process is right for your business, our Arizona Chapter 11 bankruptcy attorneys can answer your questions and advise a plan of action.

Contact Us

At the Harmon Law Office, LLC we know how much your business means to you. We will work hard to help you protect it. Contact our Arizona Chapter 11 bankruptcy lawyers at today 480-829-0494.