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A Corporation May Choose The Chapter 11 Bankruptcy Plan

Sometimes big business gets in trouble because of poor judgement decisions, or over spending in one department, or another.  When this happens a corporation has the option of filing chapter 11 bankruptcy.  The plan enables the company to hold off on repaying their debt, and allows time for management to regroup, and come up with better prospects for success.  In the meantime, daily operations can proceed as usual, with monthly reviews to be issued to the bankruptcy court. The corporation can also use the time to calculate a repayment program, and hopefully arrange to be able to reduce the amount of their debt.  Creditors are classified as secured, or unsecured, and paid back accordingly.  A reorganization plan that includes adjusting the debt, must be agreed upon by the creditor, and in compliance with the court.

Although a chapter 11 bankruptcy plan is usually associated with large corporations, it is sometimes available to small businesses as well.  But, if the courts determine at some time, that the business is not going to be able to turn things around, and become profitable, the bankruptcy will be converted to chapter 7.  Because chapter 11 is not advisable for all small businesses, a bankruptcy lawyer should be consulted to discuss all available options.

A corporation is seen to be separate from its owners, the stockholders.  This being the case, the stockholders cannot be held personally responsible for any debt that their corporation incurs.  The only way that a stockholder can be adversely affected by a corporations’ chapter 11 bankruptcy, is if the value of the stock is diminished, as a result.  On the other hand however, a small business owner may be putting his personal assets on the line if he files chapter 11 bankruptcy.

The associates of the Parker Lawyers legal firm are experienced in bankruptcy law.  After consulting with you about the circumstances of your case, they will be able to guide you through the various bankruptcy plans available to you, and help you to determine which one is the more suitable choice.  Call 303-841-9525, and let Parker Lawyers help you get the peace of mind that comes with a confident decision.


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    19751 Mainstreet
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    Parker, Colorado 80138
    Phone: 303-841-9525