New Jersey Chapter 11 Bankruptcy for Businesses
When a business files Chapter 11 bankruptcy, the process is largely the same as if an individual files for Chapter 11. However, this can depend on what kind of business it is. A large, multinational corporation is going to be drastically different than a high net worth individual. On the other hand, a small business is not going to be drastically different from a high net worth individual.
If you are considering bankruptcy for your business, you should consult with an experienced bankruptcy attorney. An attorney could look your financial situation and advise you about New Jersey Chapter 11 bankruptcy for businesses. If this is the best course of action, they could walk you through the process and help with your negotiations.
How Bankruptcy Could Help a Small Business Survive
Filing for bankruptcy could help a small business survive because it gets them on a debt restructuring plan. It is not a good fit for every business, but if the underlying problem with the business is managing their debt load, they are probably a fine candidate for Chapter 11. If their issue is income stream, however, it may not be a good fit. The prime target for a Chapter 11 is a business or individual that has a debt structure issue.
How Bankruptcy Impacts Employees
Employees would be impacted by a New Jersey Chapter 11 bankruptcy filing because if their contracts of employment would be on the table. If there are union contracts where they have to pay the union so much per hour, those would be on the table as well. It comes down to what the rights are of the employee going into the bankruptcy, and this could potentially change in the life of the bankruptcy.
The wages of any company is generally about a third, so that is a big target for the presumption of debt. If one could shave off ten percent, 15 percent, or 20 percent of their underlying wage obligations for any employee, it is a good amount of relief. In terms of what to changes to expect for those employees, this can vary from case to case.
Are Business Owners Personally Liable for Business Debt?
If the business owner signs a personal guarantee, they are liable for the business debt. However, the actual filing of the bankruptcy and any subsequent order from the bankruptcy court changes the nature of that obligation. If one signs off on an American Express card as Joe Jones’ Small Business outside of bankruptcy court, American Express or another creditor could ask them for that.
Once they file for bankruptcy, however, everything has to be settled. All creditor relationship issues have to be settled within the context of a bankruptcy court. The Bankruptcy Code delineates and defines debt rights and obligations each party has to their advantage. Once they are in bankruptcy court, it is almost guaranteed that the nature of that relationship is going to change.
What to Expect When Filing for Chapter 11 Bankruptcy
When a business undergoes Chapter 11 bankruptcy, they should expect to have a realistic roadmap for the creditors to be able to accept a reduction in debt. If they have a good long-term relationship with the creditors, most creditors would appreciate the honesty of going to them with a prepackaged Chapter 11 and saying that given their debt structure, they are not able to afford to do this.
Either the creditor gets little through a Chapter 7, or they work with the business to get something. In those circumstances, most creditors would appreciate the candor and honesty of approaching them. There need to be honest conversations in negotiations with the creditors. The primary fact of New Jersey Chapter 11 bankruptcy for businesses is having good-faith negotiations with the creditors.
Call to Learn More About New Jersey Chapter 11 Bankruptcy for Businesses
New Jersey Chapter 11 bankruptcy for businesses may be a good option if your business is struggling with its debt structure. A qualified bankruptcy lawyer could look at your situation to see if Chapter 11 is right for you, and if so, they could stand with you through the whole process. Even if Chapter 11 bankruptcy is not the best move for your situation, they may be able to suggest alternative options. Call today to schedule a consultation.