Many successful Georgia businesses have had periods of time where they had to battle through rough stretches financially. In some cases, these issues came about due to macroeconomic conditions, while in others, they were the result of something company-specific. Either way, as a business owner, dealing with mounting debt can be an overwhelming experience that can result in many sleepless nights pondering what to do.

If you find yourself in these unfortunate circumstances, there are probably multiple debt relief options available to you from which to choose. However, with all of the complexities, potential expenses and time frame involved, determining the best route to take can be critical for your company’s future. One of the most common forms of bankruptcy filed by businesses facing these type of issues is Chapter 11.

What happens when a company files Chapter 11?

Chapter 11 typically allows a company to continue to operate during the bankruptcy process. As the business owner, you will have the opportunity to propose a reorganization plan aimed at helping your company restructure its debt and obligations. Downsizing certain elements of the business, liquidating some or all assets, and renegotiating existing debts are things that are often included within these plans.

Regardless of the uniqueness of your plan, it still must be in the creditors’ best interests. You also reserve the right not to propose a reorganizational plan. In this situation, your creditors would then have the right to create their own proposal.

During this process, there are particular business decisions that will now require the court’s permission, including the following and more:

  • Expanding or shutting down any business operations
  • Selling any of the company’s assets with the exception of inventory
  • Initiating any type of rental agreement
  • Formally partnering with any vendors or unions
  • Initiating a loan that commences post-bankruptcy

Is Chapter 11 the right option for your company?

There are different ways in which your company could potentially benefit from a Chapter 11 bankruptcy filing. First and foremost is being able to continue to operate and produce revenue that can help alleviate your debt burden. Secondly, your creditors will no longer have permission to contact you per a court order. Finally, if you own a small business with less than approximately $2.7 million in total debt, there is a subchapter V option that can greatly speed up the process while also giving you more negotiating power.

On the other hand, Chapter 11 can present more complexities than any other form of bankruptcy filing. This can create the possibility of more expenses and time being involved in the overall process versus some of your other debt relief options. Fortunately, an experienced attorney can carefully analyze your unique situation, determine the best course of action for you and your company, and put you on a path toward a fresh financial start.