A small business can run into the same types of credit problems that an individual can face. When the business owner reaches the point that they can’t pay their bills, they have to consider bankruptcy as an option. Many business owners have invested a lot of time and energy in developing prudcts and customer base, they don’t want to walk away from it. Instead of closing the business, they want to use chapter 11 in Chicago to give them time to reorganize their finances. They need to find a law firm that has experience helping companies get back on their feet.
Chapter 13 allows a small business run by a person to reorganize. However, there is a limit to the amount of debt that can be settled in a Chapter 13 bankruptcy. An individual can’t use Chapter 13 if they have over $383,000 worth of unsecured debt or $1,149,000 of secured debt. Therefore some businesses that have a great deal of debt are forced into Chapter 11. Debtors should not go through this process without a lawyer who is knowledgeable about financial matters and bankruptcy law. A person or company can only go through bankruptcy once in a seven year period. Therefore it is necessary that all aspects of the business be brought under control.
When a business uses chapter 11 in Chicago, the bankruptcy court can review labor agreements and contracts. If the business can no longer afford to pay people the promised wages. The court can void the contract. The workers and business can then renegotiate more favorable terms for the business. A law firm that has experience in negotiating labor contracts can be valuable at this point. If the business owner agrees to wages or benefits that aren’t linked to profits, the company may not be sustainable.
Depending upon the products that the company makes, it might be necessary to renegotiate contracts for raw metals and other inputs to production. When people begin a small business, they often don’t have the experience to understand the impact of these costs on the bottom line. The bankruptcy organization can be a learning tool that helps a business owner become more efficient and a better negotiator. Visit Lakelaw.com for more information.