How does a Chapter 11 bankruptcy affect my business?

When filing for Chapter 11 bankruptcy in Virginia, you are essentially asking the court to help you reorganize your debts in order to keep your business afloat. Through this process, a number of factors can potentially affect your business. First, filing for Chapter 11 bankruptcy puts an “automatic stay” in place that prevents creditors from taking any further legal action against you, such as seizing your business’ assets. This allows you time to restructure your debts, allowing you to pay off your debts over time while also allowing you to keep your business open and running. Second, filing for Chapter 11 bankruptcy allows you to establish a repayment plan that is based on your current and future financial situation. This payment plan is then submitted to the court for approval, and once approved, your creditors must abide by the new repayment schedule. Lastly, the filing for Chapter 11 bankruptcy also allows you to renegotiate some of your contracts and other obligations, such as leases and franchises. This is done with the help of an attorney and can help you lower your overhead expenses and make better use of your limited resources. Although filing for Chapter 11 bankruptcy can help your business stay afloat, it is important to remember that this process comes with a number of risks and costs. Furthermore, your business’ credit rating will be impacted by the filing, so it should not be entered into lightly. Ultimately, it is best to speak to an experienced financial professional or attorney before deciding whether or not to file for Chapter 11 Bankruptcy.

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