It can be difficult to keep a business afloat during times of economic strife. However, business owners in Virginia have the option to use bankruptcy to their advantage. Rapidly changing retail models often necessitate quick action, and for some, this means turning toward Chapter 11 bankruptcy.
What is different about Chapter 11 bankruptcy?
Businesses generally have two bankruptcy options when struggling with debt, profit and overall finances — Chapter 7 or Chapter 11. Chapter 7 is a liquidation approach that involves the selling of business assets to satisfy creditors. On the other hand, Chapter 11 bankruptcy creates the opportunity to reorganize by restructuring finances.
Why file for Chapter 11?
For some businesses, filing for bankruptcy is a last-ditch effort to become profitable after months or even years of struggle. There are other reasons to seek help, though. Some businesses might anticipate trouble looming — often due to significant changes in retail trends — and decide to take action before it’s too late. Many companies that opt for Chapter 11 bankruptcy:
- Plan on continuing operations
- Want to do so with less debt
- Are concerned about future changes in the economy
As a business owner, deciding whether to file for bankruptcy can feel like a deeply personal decision. Managing business and financial expectations on top of this decision may lead to delayed action that can further complicate company finances. Since there is a lot to consider, Virginia business owners who are considering Chapter 11 bankruptcy are often well advised to speak with a knowledgeable attorney about their options.