Contrary to popular belief, filing for bankruptcy doesn’t inherently mean losing your business. By choosing to file for Chapter 11 with help from your Wisconsin business bankruptcy lawyer, you can reorganize your business and pay off your debts over time while keeping the doors open and your team working.
But to be successful, you’ll need to create a clear and detailed reorganization plan that meets the court’s approval. Though every business’s situation is different, there are a few key steps you’ll want to take to create a reorganization plan the court will approve of. Here’s what you need to do.
Create a Detailed Financial Plan
You want to show that you’re going to be able to repay what you owe. The best way to do that is to give the court a clear breakdown of your financial projections. Make sure your projections are realistic and reasonable. Though it’s tempting to make your business sound more profitable, especially if you think you can get your business’s profits up, doing so can backfire and cause the court to reject your plan. Set realistic targets and shoot for the moon behind the scenes.
If you’re not sure what to include, your business bankruptcy lawyer can help you identify key factors. Work closely with them to increase the chances of the court approving your plan.
Prioritize Your Creditors Correctly
Chapter 11 bankruptcy reorganization plans must adhere to the absolute priority rule. This rule states that higher-priority creditors must receive payments in full before lower-priority creditors. High-priority creditors are those with secured debts, like equipment lenders, mortgage lenders, and other similar creditors. Low-priority creditors are those with unsecured claims. This may include vendors, suppliers, and bondholders.
Again, if you’re not sure how to prioritize your creditors, don’t worry. Your bankruptcy attorney will be able to help. Provide them with information for all of your creditors so they can more accurately assess the situation.
Craft Your Disclosure Statement
Your disclosure statement helps describe your company’s current finances. This gives the court a better understanding of where you’re succeeding and where you’re struggling. However, the disclosure statement doesn’t stop there. It also outlines the terms of your repayment plan so everyone can be on the same page.
You’ll need to break everything down into clear steps. Describe who you’ll repay and when, how you’ll make those payments, and any other information your Wisconsin business bankruptcy attorney feels is relevant. Remember, the more information you can provide the court, the more likely it is that the judge will approve your plan.
Outline a Communications Plan
You’ll need to communicate with your creditors throughout the repayment process. Factor that communication into your plan and be prepared to explain how you’ll handle any possible delays in payment or other roadblocks that may pop up during the repayment process. Your Wisconsin business bankruptcy lawyer can help you explain to your creditors what they can expect so everyone is on the same page.
Your Reorganization Plan Can Strengthen Your Case
Having a clear Chapter 11 reorganization plan ready for the court to review can expedite the approval and eventual settlement of your bankruptcy case. Take the time to prepare your plan and provide as many details as your attorney feels is appropriate. By presenting a plan that’s designed with repayment in mind and provides accurate and reasonable projections, you’ll be better equipped to hit the ground running and get your business back on track.
If you’re considering filing for Chapter 11 bankruptcy, don’t try to represent yourself. Work with an experienced Wisconsin business bankruptcy attorney and let them represent your case. Contact Kerkman & Dunn today to schedule a free consultation and learn more about your options.
