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.
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.