When a small business in Wisconsin is struggling, the owners may consider filing for a Chapter 11 bankruptcy. It offers the entity the opportunity of financial reorganization and restructuring of its debts. One of the benefits of a small business bankruptcy is the fact that operations can continue during the reorganization process. After working through detailed financial information provided by the filer, a collaboration between the courts, the creditor and the debtor will format a proposed reorganization plan.
The filer must file a written plan for approval of the court and creditors, and it must show how outstanding debts will be addressed. Creditors will then have the opportunity to raise questions and make counter-offers or challenge the plan’s feasibility. The court makes the final determination. A trustee appointed by the court will oversee business operations, making periodic reports to the court.
Under Chapter 11 bankruptcy, creditors cannot repossess the business. The status of the business is referred to as debtor(s) in possession, and no change of ownership will take place. Operations can continue until the restructuring plan is complete and the debtor emerges from bankruptcy. Despite the restrictions under the payment plan, the debtor in possession may void specific transactions that occurred in the year prior to the bankruptcy filing.
A Chapter 11 filing may provide the opportunity for the business to get above water. Wisconsin owners of small businesses may find that the support and guidance that an experienced business bankruptcy attorney can offer throughout the reorganization proceedings is invaluable. Working closely with such a professional can help the business owner to make the right choices to forge a path toward renewed business success.
Source: Houston Chronicle, “What Does a Chapter 11 Bankruptcy Filing Mean for a Struggling Small Business?“, Linda Ray, Accessed on Dec. 28, 2015