Businesses struggling with debt may be able to restructure their finances through Chapter 11 bankruptcy. Because of the time, costs, and potential risks associated with this form of bankruptcy, it is imperative to seek legal counsel. At Toronjo & Prosser Law, we are available to help Dallas-Fort Worth business owners understand their options in Chapter 11 bankruptcy proceedings.
We combine the sophisticated advice of a large firm with the personal service of a boutique practice. When you consult with us, we will assess your prospects for returning to profitability and determine whether filing for Chapter 11 bankruptcy protection is the best option for your business.
If so, we can help to devise a plan that allows you to pay off your business debts and continue operating. Our experienced bankruptcy attorneys are here to help you make informed decisions about the future of your business. Don’t delay. Contact our office today for a free evaluation of your case.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy provides struggling but viable businesses with an opportunity to reorganize their debts while maximizing returns for creditors. This form of bankruptcy may also be used in limited circumstances by individuals who do not qualify for a Chapter 7 or Chapter 13 filing.
In a Chapter 11 proceeding, a business files a petition in bankruptcy court and must submit a proposed reorganization plan within a set time period. The creditors also have a say in the plan: they can propose an alternative or move to dismiss the case and convert the bankruptcy to a Chapter 7 liquidation.
Ultimately, for the bankruptcy court to approve the plan, it must be feasible: the business must be able to show that it will be able to generate enough revenue to cover the repayment plan. The court must also find that the plan is in the best interests of the creditors. Nonetheless, the debt burden of the business can be significantly reduced in a Chapter 11 bankruptcy.
In any event, approval of a plan may take as little as a few months, or as long as a few years before the company is able to successfully emerge from bankruptcy. At Toronjo & Prosser Law, we have the experience and knowledge to see you through a reorganization bankruptcy.
What is a debtor-in-possession?
Unlike other bankruptcy filings, a trustee is not typically appointed in Chapter 11 cases. Instead, the business continues to operate as a debtor-in-possession while under the supervision of the bankruptcy court. At the same time, the court has control over activities that are not in the ordinary course of business, including: selling, purchasing, refinancing or leasing major capital assets. Our legal team has a well-earned reputation for providing our clients with skilled representation before the Texas bankruptcy courts.
How Toronjo & Prosser Law Can Help with Chapter 11
Navigating a Chapter 11 bankruptcy poses serious challenges for business owners. That’s where Toronjo & Prosser Law comes in. Our bankruptcy attorneys represent all types of businesses — sole proprietorships, partnerships and corporations. When you become our client, we will work closely with you to develop a reorganization plan that meets with the approval of the court and your creditors.
By understanding your business objectives, we will help to explore a wide range of available restructuring strategies, including:
- Seeking new financing
- Rejecting and canceling existing contracts
- Modifying secured loans
- Bringing commercial loans or leases in default
Our legal team will also provide ongoing counsel while you are under court supervision to ensure that the business is fulfilling its obligations under the reorganization plan as well as to mitigate potential disputes with creditors.
Is Chapter 11 Bankruptcy Right for My Business?
There are a number of advantages to Chapter 11 bankruptcy, including:
- The business can continue to operate while paying off debts
- Debtors are allowed to partially pay back unsecured debts
- The automatic stay stops all collection activities and creditor lawsuits
- Secured debts can be lowered and spread over a longer period of time
Although Chapter 11 bankruptcy can be very beneficial, there are also disadvantages, not the least of which is some loss of control over business operations. Debtors are also required to file detailed financial records with the bankruptcy court, which become a matter of public record and result in a loss of privacy.
Finally, businesses must be able to return to profitability in order for a successful reorganization bankruptcy. In this regard, the majority of Chapter 11 cases are dismissed because the proposed repayment plan is not workable, and the bankruptcy may ultimately be converted into a Chapter 7 liquidation.
When you come to Toronjo & Prosser Law, we will help you weigh the pros and cons of Chapter 11 bankruptcy and determine whether reorganizing your finances is a viable option for your business.
Contact Our Experienced Texas Chapter 11 Bankruptcy Attorneys
Running a business can be an exciting and lucrative venture. However, poor market conditions, unexpected expenses, and a lack of cash flow can result in insurmountable debt. Although Chapter 11 bankruptcy allows your business to restructure its finances and reduce expenses, you must be able to return to profitability for the reorganization plan to succeed.
Given the challenges associated with Chapter 11, it is crucial to have the informed representation Toronjo & Prosser Law provides. Our experienced business bankruptcy attorneys will work strategically to protect your interests and your livelihood. Please contact our office today to schedule a consultation.