Very few businesses in Birmingham do not experience financial struggles. Thus, the fact that your company is experiencing a lean season is certainly not unique. There are a number of different remedies that can help get you through your struggles, yet when the threat of having any of your business’ properties foreclosed upon arises, a definite sense of urgency sets in. You may have been considering bankruptcy even before the possibility of foreclosure presented itself; once it does, however, the question then becomes whether such an action would provide the relief you are seeking.
There is a good reason why so many businesses seek bankruptcy protection under Chapter 11. Dubbed “a reorganization bankruptcy,” Chapter 11 allows business owners the opportunity to restructure their companies’ internal hierarchies to ensure that the issues that led to their financial woes do not happen again. This benefit comes in conjunction with the protection afforded by bankruptcy due to the automatic stay.
An automatic stay immediately halts any collection activities that have been initiated against your business in order for you to see to the details of your bankruptcy case. According to information shared by the website for the Federal Judiciary, this includes any pending foreclosures. The purpose of the automatic stay in a Chapter 11 case is to afford you the time to come up with your reorganization plan, as well as to secure the time needed to shore up your business’ financial situation (either through a sale of the company or securing a business loan). Your plan can then help in negotiating with creditors to avoid foreclosure as you work toward getting out from under the company’s debt.
A Chapter 11 bankruptcy can be damaging to your business’ reputation, however. Therefore, a decision to seek such action should not be rushed into.