Many people assume companies that file for Chapter 11 bankruptcy are “going out of business.” In fact, there are dozens of well-known examples where businesses used Chapter 11 bankruptcy to survive. For example, Six Flags and American Airlines both thrived after filing. If your business is struggling with its finances, Chapter 11 protections can help by: Halting collection attempts: After filing for Chapter 11 bankruptcy, an automatic stay is issued. The automatic stay halts collection attempts, and can allow businesses to maintain ownership of vital properties and assets. Preserving control of operations: Chapter 11 bankruptcy allows businesses owners and executives to maintain control over most decisions and operations. This can allow businesses to continue operations while paying off debts. Restructuring debts: Chapter 11 bankruptcy restructures business debts. Businesses may be able to adjust interest rates on leases, equipment or other assets. In addition, Chapter 11 can help business owners bring…
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Chapter 11 bankruptcy can give businesses a chance to restructure debts, maintain control of operations and become profitable again. The following three examples briefly describe how businesses have pulled themselves back from the brink of failing by filing for Chapter 11. American Airlines: In late 2011, AMR Corporation was in serious financial trouble. AMR Corporation is the parent company of American Airlines. By October of 2011, the market value of the company was $727 million – very bad news if you own a major airline. AMR Corporation filed for Chapter 11 bankruptcy one month later. In December of 2013, AMR Corporation exited bankruptcy and merged with US Airways. The company is now known as American Airlines Group Inc (AAG). AAG had one of its most profitable years in 2014. Marvel Entertainment: Marvel Entertainment is the company responsible for The Avengers, Spiderman, Daredevil, Captain America, Iron Man and Deadpool – just…
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Businesses experiencing extreme financial hardship may be reluctant to file for Chapter 11 bankruptcy. There are myths and misconceptions about bankruptcy that make this decision even more difficult. Just because your business files for Chapter 11 bankruptcy does not mean it will cease to exist. It also does not mean you will be unable to make decisions for your company during the Chapter 11 process. Under 11 U.S.C. § 1101, business owners can maintain some control as “debtors in possession.” A business owner remains a debtor in possession until a Chapter 11 reorganization plan is confirmed. However, a business owner is no longer considered a debtor in possession if the case is converted to a Chapter 7 bankruptcy, dismissed, or a trustee is appointed. As a debtor in possession under Chapter 11 bankruptcy, you do maintain control over most operations and business decisions. There are some exceptions to this rule….
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*Credit card payments will not be accepted for bankruptcy cases, unless pre-approved by The Sader Law Firm. If you have a question about a credit card payment, please call our Office Manager at (816) 561 1818.
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