It is not uncommon for businesses in Virginia to face uncertain financial situations at some point in their existence. After all, the economy swings up and down over the course of years, or even decades, and circumstances might change for a company that once had a successful business model but suddenly finds itself faces mounting debt and decreasing profits. For businesses in Virginia that are facing these problems, Chapter 11 bankruptcy might be an option.
Chapter 11 bankruptcy is a form of bankruptcy that is almost exclusively for businesses. And, one of the crucial aspects of this form of bankruptcy is that the business gets to continue to operate as the court process moves forward – if that is the smart choice. The essence of a Chapter 11 bankruptcy filing is that the company that pursues this form of bankruptcy devises a plan to reorganize the business, while also putting together a plan to repay debts.
As our readers can imagine, the company’s debt-holders have a say in how the reorganization plan works and how debt will be either repaid or discharged. However, if the reorganization plan is a competent plan made in good faith, in all likelihood the bankruptcy court will approve the plan and allow the company to move forward.
“Bankruptcy” is a term that has ominous undertones in the business world. But, filing for Chapter 11 bankruptcy doesn’t mean that the company needs to liquidate and “go out of business.” It is a process that may allow companies in Virginia to come up with a plan to stabilize and return to profitability.