It is not uncommon for a failing business to consider Chapter 11 bankruptcy. The law was established to provide businesses with the ability to reorganize their debts into a reasonable payment plan that is easier to manage. Small and large corporations alike can file for Chapter 11 bankruptcy to help relieve some of the debt accumulated. Speak with our Chapter 11 bankruptcy attorneys in Monroe, LA to get started today!
Chapter 11 bankruptcy gives companies the option of reorganizing their debts into a single structured repayment plan. A vast majority of these cases involve the restructuring of various debts including income taxes, property taxes, and payroll taxes. This option is most favorable for businesses that would like to stay in business during the bankruptcy process.
Businesses benefit by being able to renegotiate repayment terms between themselves and the taxing authority on mutually acceptable grounds. Once they agree on a plan, the courts must approve the claim before the business owner can make any official changes.
Executive Contract Debt
Chapter 11 also allows businesses to accept or reject leases and executory contract. One such example could be of a clothing company that contracted the services of a particular manufacturer to make their clothing for ten years. After the clothing company files for Chapter 11 bankruptcy, the clothing company then has the ability to end the agreement and seek services elsewhere.
However, the clothing company must first express to the judge that ending the contract with Manufacturer A and signing a new one with Manufacturer B will contribute to the profitability of the business. The judge will likely authorize the new contract if they can prove this to be true.
Secured vs. Unsecured Debt
Secured debt is debt tied to any tangible item like business equipment, real estate, and vehicles. In a Chapter 11 business bankruptcy, a business owner must identify which debts and collateral will add to the company’s ability to turn a profit. The ensuing step would be to pay the current value of the property as opposed to paying the actual amount owed.
Unsecured debt, on the other hand, comes refers to debts like credit cards and signature loans. Such finances can help a business owner with upstart expenses and afford ongoing costs but tend to weigh a heavy burden on profit margins. Chapter 11 bankruptcy grants a business owner the ability to restructure unsecured debts with creditors and agree on a repayment plan.
Call Our Chapter 11 Bankruptcy Attorneys in Monroe, LA!
The bankruptcy process can be lengthy and time-consuming if you lack the necessary legal counsel. You should make sure that you have an experienced Louisiana bankruptcy attorney who can accurately and successfully get you through a Chapter 11 Bankruptcy.
At E. Orum Young, we have more than 35 years of experience and have filed more than 20,000 bankruptcy cases in Northeast Louisiana. We will protect your interests every step of the way and can rush file your claim if necessary. Northeast Louisiana Legal Services has three times recognized Mr. Young as a community leader by presenting him with the Pro Bono Attorney award for his dedication to serving his community.
Contact us today for a free case evaluation.