Chapter 11 bankruptcy is in all of the headlines today, as companies such as GM, Chrysler and even Reader’s Digest file for what is commonly know as business bankruptcy. But Chapter 11 bankruptcy isn’t just for the “big boys” it can also help small and medium sized businesses reorganize their debts and protect their assets. Let’s take a look at what types of businesses file for bankruptcy.
- A corporation
- Limited Liability Company or LLC
Also companies that have assets they want to protect and/or who want to remain in business after the bankruptcy process is complete typically file for Chapter 11 bankruptcy. Also business owners who want to retain control over their business affairs benefit from filing Chapter 11 bankruptcy and reorganizing their debt as opposed to liquidating their business in bankruptcy.
For example GM, filed Chapter 11 bankruptcy; but was able to retain control of the company and continue to sell cars while restructuring its debts. If the company had liquidated, all business would have immediately ceased and all of its assets would have been sold and the proceeds used to repay creditors. This is what happened to Circuit City. To find about more about Chapter 11 bankruptcy, speak with a qualified bankruptcy attorney.