Some Tennessee businesses that are failing may benefit from filing for bankruptcy. It is possible that Chapter 11 bankruptcy offers an orderly method for restructuring debt and repaying creditors without having to shutter the company. There are many signs that a company may be headed to bankruptcy such as surviving on a line of credit, an inability to pay bills and a negative net worth.
If a company doesn’t have adequate liquidity, it could be only a matter of time before it is forced to file for bankruptcy. Ideally, business owners will opt to file sooner rather than later because it may be possible to get better terms that way. In a Chapter 11 filing, it may be possible to avoid paying unsecured creditors and reorganize secured debts. Even if the business is lost, losing it in an orderly fashion is generally the best course of action.
However, not all business owners choose to heed that advice. This may be be because of pride or an inability to admit that the company is in such bad shape. In one case, a business owner decided not to follow through on an agreement that allowed for debtor-in-possession status as well as $10 million in bonding ability. Ultimately, the creditors liquidated that company and took control away from the owner.
Business owners who are seeking debt relief may benefit by filing for Chapter 11 bankruptcy. This may make it possible to reorganize or eliminate debt without having to give up control of the company. An attorney may be able to help explain more of the benefits of doing so such as having control over most or all of the process. Chapter 11 bankruptcy may also be beneficial for individuals who don’t qualify for either Chapter 7 or 13 bankruptcy.