Business Debt Restructuring – An Alternative To Bankruptcy
What Is Business Debt Restructuring?
Business debt restructuring is the reorganization of overdue accounts so the businesses creditors can be paid without having to shut down the business or file for bankruptcy. When a company has more debt than it has income, it can find itself in a very stressful situation. Bankruptcy may be considered an option for business owners who are in this situation. Business owners need to be aware that with bankruptcy many other problems will arise. A better solution may be to perform business debt restructuring. In business debt restructuring, a company’s debts are assessed, and the best way to pay creditors while keeping the business functioning is found.
Business debt restructuring can prevent a court appointed attorney from taking over the business, and examining its books. It is a friendlier option for businesses who have found themselves in a delinquent debt situation.
What Is Bankruptcy?
Bankruptcy is a legal proceeding initiated when a person or business is unable to repay outstanding debts or obligations.
What Is Chapter 11 Bankruptcy?
If you are a business owner who is considering bankruptcy, you will most likely be looking into Chapter 11 bankruptcy. So what is Chapter 11 Bankruptcy? This form of bankruptcy is most often used by large entities, such as businesses. It is designed to enable businesses to restructure their debt while paying back their creditors. A business is able to continue operating as a “debtor-in-possession”. A debtor-in-possession is a person or corporation that has filed for chapter 11 bankruptcy but still holds property or assets that can be used to satisfy its debt to creditors.
Why Should a Business Avoid Bankruptcy?
Declaring bankruptcy comes with some serious disadvantages. It is important for business owners to be aware of these disadvantages .The cons of declaring bankruptcy include:
- Both your business and personal assets may be sold to clear off your debts. Which means you may lose equipment you need to do business, such as your laptop or your car.
- The bankruptcy will show on your credit report for six years. This period can make it very difficult to get any credit—not just a loan or overdraft, but also any service you’d usually pay for later, such as electricity (your provider may ask that you switch to a pay-as-you-go tariff, which is generally more expensive).
- You may be disqualified from being a member of your professional body, for example, if you’re an accountant or a solicitor. This exclusion can affect your ability to continue doing business.
- You may find it difficult to get a job in specific sectors, especially if the job involves handling money.
- Bankruptcy is public information. Everyone has access to find out if you have filed for bankruptcy.
Why Should a Business Owner Avoid Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a long, costly, and complex process. The amount of time that it takes for a bankruptcy court to approve a plan of reorganization after a business files for chapter 11 bankruptcy can range from a few months to a few years. During this time the chapter 11 debtor’s business is responsible for all filing, administrative, and professional fees related to its chapter 11 bankruptcy.
Once a business files for chapter 11 bankruptcy, the business loses control over business decisions that are considered outside the “ordinary course of business”. These decisions include, but are not limited to: the sale of assets, a potential settlement with a creditor, obtaining credit, and the hiring of professionals. Before making a business decision that is considered outside the “ordinary course of business”, the chapter 11 debtor’s business must obtain permission from the bankruptcy court.
Chapter 11 bankruptcy does not discharge the business owner’s personal guarantees. The business owner’s personal guarantees are usually discharged only if the business owner personally files for bankruptcy.
How can CuraDebt help you?
If you are seeking an alternative to bankruptcy you will find the help you need at CuraDebt. We have the experience and professionals who can help you with business debt restructuring and getting your business back on track. With a Debt Resolution Plan, business debt restructuring has never been easier. We help companies of all sizes who are looking for an alternative to bankruptcy. A good business debt restructuring plan is the best way for a business to get out of debt, keep its creditors satisfied, and continue running.
Please contact us today at 1-877-504-0981 for your free consultation.