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3 Signs That Chapter 11 Bankruptcy Could Be A Smart Strategy For You

Posted By admin || 29-Nov-2010

3 Signs That Chapter 11 Bankruptcy Could Be A Smart Strategy For You

Most business owners are willing to do anything to make sure that their company is successful.  From the self starting sole-proprietor to the CEO of a multinational corporation, maintaining the health of their business is of utmost importance.  But what happens when things go wrong?  What happens when the money is short but the bills keep company?  Are you willing to do what it takes to restore the health of your company? Would you be willing to file bankruptcy, although you don't want to admit that something is wrong?  Well the reality is that bankruptcy has been and continues to be used by smart entrepreneurs as a business strategy.

Below are a few signs that Chapter 11 bankruptcy may be a smart strategy for your business:

  1. You have more debt than income; but your income is steady.  Companies who are overextended on debt but have steady income are good candidates for Chapter 11 bankruptcy because bankruptcy will allow them to reduce their debt load and continue operating their business.
  2. You have a track record of success and investors who believe in you but your debt load is so high that you cannot see how you can pay it off in the foreseeable future.  Business debtors who have a track record of success but have run into hard times are good candidates for Chapter 11 bankruptcy because they may be able to win the bankruptcy financing they need to operate their business while they restructure their debts.
  3. Your industry has changed causing financial upheaval and you need the time and the opportunity to change your business model so you can compete. Business debtors who have faced major changes in their industry benefit from Chapter 11 bankruptcy because it allows them to get a fresh start while recalibrating their business model to align with the new reality of how their industry operates.
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