CHAPTER 11 BUSINESS BANKRUPTCY IN MICHIGAN

It’s tough running a business and even tougher to keep a business profitable.

Business owners throughout Michigan navigate the delicate balance of profitability on a monthly, weekly, and even daily basis.

In some situations, the accumulation of business debt overcomes a business’s ability to generate income, and in that particular situation, Chapter 11 bankruptcy should be given strong consideration.

Let’s explore some of the ways a business can arrive at a situation where Chapter 11 bankruptcy would be a suitable solution:

How a Business Can Arrive in Chapter 11 Bankruptcy

1. Sales are way down. Nothing happens in business unless a sale is made. Being unfocused on new business development for extended periods of time can place a business of any size in financial jeopardy.
2. Accumulating and unpaid debt. Having debt as a business is fine as long as the debt is satisfied. When debt accumulates, fees of all sorts become added to principle and interest payments. Examples of these types of debts can include credit cards, business credit lines, equipment loans, and even refinanced corporate debt.
3. Weak collection practices. In order for a business to remain solvent its customers must pay their invoices and bills. When this doesn’t happen, or when unreasonable delays in payment occur, then the financial health of a business can be jeopardized.
4. No reduction in expenses. If a business is struggling financially, one of the first areas to explore is making reductions is in its expenses. These can include variable expenses (such as entertainment expenses) and fixed expenses (such as building rent and energy costs). If a struggling business ignores these easy areas to reduce its financial burden then that could lead to an unfavorable financial situation.
5. Unforeseen circumstances and events. There are events that simply cannot be predicted that can negatively affect the success of a business. Examples of these types of events are: toxic partnerships, embezzlement by a key employee, unpaid corporate taxes, lawsuits, product recalls, or a major calamity during a lapse in insurance coverage.

Chapter 11 Bankruptcy as a Second Chance

A Chapter 11 bankruptcy can bring solace to a business that is struggling financially. A Chapter 11 bankruptcy is different than a Chapter 7 or Chapter 13 bankruptcy in that it offers a business the following opportunities:

1. Restructure debt with their creditors while keeping certain assets.
2. Remain open and to operate freely.
3. Cease collection efforts and stave off potential lawsuits.
4. Protection from liens and property foreclosure.

What To Do Next?

If slow collections, slow sales, and unforeseen calamities have you worried about your business Contact the business bankruptcy experts at Gold, Lange & Majoros, P.C. or call (248) 350-8220 for a confidential review of your situation and how we can best help you.