A Chapter 11 is basically a reorganization of the party that is in debt. It allows the debtor to be placed on an automatic stay, which means that the company is given time to work on restructuring without being forced into litigation by creditors. A plan is created to find a way to pay each creditor, whether through the sale of assets or other means. Sometimes labor contracts or supply contracts are canceled via legal means; this is called an executory contract rejection. Bankruptcy attorneys can help decipher what can and cannot be done in these instances.
When assets are sold or revenue is earned, the money will be used so that the secured creditors will be paid first. Secured creditors include employees of the company, material suppliers and other persons who may have some type of security interest in the business. After secured creditors are paid, then the unsecured will be paid. In some cases, a reorganization that leaves the original owners in possession of the business is not possible. In these cases the creditors may be entitled to take over the company.
A team of bankruptcy attorneys will be able to assist you in establishing the best solution for your circumstances. There are many different options that can be considered. Financials will have to be organized in a manner that allows for full disclosure of all assets and liabilities. This can be a complicated process, but an experienced law firm can help you through this and ease some of the stress. This can be just as complicated for sole proprietors as they can be for much larger. Although the larger company has a lot more paperwork to deal with, a sole proprietor may not have the financials as well organized as a corporation that has a team in place specifically for these purposes.
Whether you have a large or small company that is having financial issues right now, you should consider consulting with bankruptcy attorneys that will be able to guide you during this rough time. Filing a Chapter 11 can help ease your stress by allowing you the time and the ability to stop harassing phone calls and impending litigation while permitting you to find a way out of this situation. Successful law firms can help you deal with this entire process while taking some of the work off of your shoulders.