If your company has been involved in a loan default with one or more of its creditors and you simply don't have the funds to repay the monies owed, you might be able to benefit from filing Chapter 11 Bankruptcy. This type of bankruptcy amounts to a simple reorganization of your business. One point that's of real significance in these proceedings is that Chapter 11 protects your company's assets from being auctioned off to repay its debts.
Some of the advantages of Chapter 11 Bankruptcy include:
Chapter 11 Bankruptcy can typically allow your company to continue functioning while following an agreed-upon plan for repaying its debts. Whereas certain types of bankruptcy force businesses to sell their assets to satisfy their creditors, thus preventing them from generating new profits and possibly becoming viable again, Chapter 11 allows your company to carry on its day-to-day operations, with you serving as manager, under court supervision.
With this type of bankruptcy, your company's creditors must generally agree to a reorganization plan before it can be implemented. However, under certain circumstances, you may be able to get your own plan confirmed despite their opposition, as long as you can meet certain statutory requirements.
While Chapter 11 Bankruptcy is more flexible than other bankruptcy types, that flexibility usually comes with a higher price tag. The success rate of company reorganizations under this chapter is also typically quite low. For these reasons, you'll want legal advice from a bankruptcy attorney on which bankruptcy chapter would be most suitable to your company's specific circumstances and whether Chapter 11 would actually work best for your business.