When your business is struggling to pay back its debts, filing for bankruptcy can give you the fresh start you need. And as a business owner, you have several types of bankruptcy that you can consider. Each type offers its own distinct benefits and drawbacks, but for many business owners, filing for Chapter 11 bankruptcy is the better choice, especially if you want to sell your business.
What Is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a type of bankruptcy that lets you restructure and reorganize your business. The main point of this form of bankruptcy is to help you keep the doors open and get your business back up and profitable while settling your debts with your creditors.
During that time, the business will operate as normal while the company makes payments to the creditors according to the plan they agree on. If the business decides to make changes to the way things are run or wants to roll out new products and services, the business owner or owners may need to consult with their creditors and the bankruptcy court prior to implementing those changes.
This helps ensure that all aspects of the business are being run in a way that’s in the best interest of the creditors.
So, Can You Sell Your Business in the Midst of Chapter 11 Bankruptcy?
Under most instances, you’re able to sell your business even when you’re in the middle of a Chapter 11 bankruptcy filing. However, you may need to seek the permission of the court to do so. It depends on who you’re selling to, how much of the business you’re selling, and whether you’re simply selling the company or are trying to off-load different assets.
If you’re considering selling your business, it’s best to consult with a Wisconsin bankruptcy lawyer. They’ll help you decide on the best course of action and make sure you’re in full compliance with the court’s regulations.
What Happens After You Sell
When you sell your business, the buyer may hire you to run the company as you have in the past. This can help reduce disruption in the company and may make it easier for the business to stay profitable. Further, the buyer can end up selling the business back to you so you can keep your company.
Keep in mind that the proceeds of the sale of business assets may need to go to your creditors to settle outstanding debt. Every situation is different, so be sure to speak with an attorney before you initiate the sale.
Schedule a Consultation Today
Filing Chapter 11 bankruptcy and selling your business is possible. And if executed correctly, it can dramatically reduce the financial burden you face with your creditors. If you’re interested in filing for bankruptcy or want to sell your business while you’re filing for Chapter 11 bankruptcy, the best place to start is by speaking with a Wisconsin bankruptcy attorney.
At Kerkman & Dunn, we’re proud to help businesses across different industries find the right bankruptcy solution for their needs. Contact us today to schedule a consultation.