Chapter 11 Bankruptcy
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According to the Small Business Administration (SBA), small businesses significantly impact California's economy. Not only do they represent 99.2% of all employers and employ 50.4% of the private-sector labor force, keeping small businesses in operation is crucial for all California residents.
The SBA reports that in 2010, small businesses employed 6.3 million workers, but from 2007 to 2010, the employment situation was weak in California. The majority of the state's small businesses are very small and 80.3% of all businesses don't have any employees and most employers have fewer than 20 employees. In recent years, much of the angst over California's economy has been over jobs and whether employers are going to move to states such as Texas.
With the number of California businesses decreasing in recent years, the problem is more likely the disappearance of numerous businesses as opposed to businesses leaving the state. California, much like its neighbor Nevada was hit hard by the Great Recession, and many businesses are still struggling from the tougher economic times.
Understanding Chapter 11
Chapter 11 bankruptcy is the primary reorganization Chapter available for business debtors. The general goal of the Chapter 11 is to assist the financially distressed business debtor so that he or she can restructure and negotiate its debts with its creditors and establish a plan of reorganization that allows the debtor to continue business operations after commencing the bankruptcy case.
Chapter 11 bankruptcy cases are usually filed by partnerships, corporations, and limited liability companies; however, individuals can file for Chapter 11 if their debt or income exceeds the thresholds set for Chapter 7 and Chapter 13 bankruptcies.
The debtor ordinarily continues business operations after it files Chapter 11; however, loses control over major decisions which are left to the bankruptcy courts, some of which include selling real property, entering into or breaking a lease, shutting down or expanding operations etc.
Advantages of Filing a Chapter 11
- The business debtor is protected from creditor harassment and collection.
- Creditors are assured payment from the debtor.
- The debtor creates a reorganization plan that is approved by the bankruptcy court.
- The debtor maintains rights to acquire earnings from the business but still prioritizes to pay off the business's debts.
Why choose Kostopoulos Bankruptcy Law?
At Kostopoulos Bankruptcy Law, in our 10 years in practice we have assisted thousands of bankruptcy clients. Our lead attorney, Rita Kostopoulos is a certified consumer bankruptcy specialist by the American Board of Certification and our firm has been named one of the Top 100 Firms by Debt Education and Certification Foundation (DECAF). If your business is facing insolvency or if you don't qualify under a Chapter 7 or 13, we urge you to get in touch with a San Francisco bankruptcy attorney from our firm - (877) 969-7482.
The Chapter 11 bankruptcy is ideal for businesses and corporations that wish to continue their operations while reorganizing or restructuring their business so they are able to pay creditors while generating income.