Chapter 11 Bankruptcy in Pontiac
Chapter 11 bankruptcy laws affect filers and creditors alike. When filing in Pontiac, Lapeer or elsewhere in Michigan, Chapter 11 is sometimes called filing for protection or filing for reorganization, and is available to sole proprietors as much as large corporations. In general, it is a means for managing debts that are larger than the individual or company can manage in the short run, while the debtor still remains in control of assets, operations and the cash flow the business generates.
Under advice of a bankruptcy attorney, a company considering Chapter 11 can put these key considerations to work:
- Filers use the tools of Chapter 11 to resolve debt issues and take control of their business finances.
- Creditors receive a payback over time, or a portion of assets if the company eventually liquidates.
- Changes to federal bankruptcy laws in 2005, affecting Michigan debtors and creditors, result in case resolutions at accelerated speed.
In any event, a Chapter 11 filing is an orderly means for resolving debts that outstrip available resources. While a bankruptcy filing might lead to the demise of the enterprise, often it is a tool for remaining viable. It provides a time out for the company, allowing owners and managers to work out a strategy for reducing costs and paying off debts on a manageable schedule.
The rules for filing Chapter 11 vary from those that apply to Chapter 7 and Chapter 13. Chapter 11 is rarely used for consumer bankruptcy filings, except in cases of considerable personal assets, such as in a divorce or adverse litigation.
Businesses vulnerable to consumer bankruptcies
As almost everyone is painfully aware, personal as well as business bankruptcies are higher today in Michigan than they were five and ten years ago. And in Michigan, the situation is particularly difficult due to the downturn in the auto industry.
The numbers are stark: In 2009, personal bankruptcies numbered more than 69,000 in Michigan. Business bankruptcies were around 2,080. For companies that sell products to consumers, it of course stands to reason that consumers who are bankrupt can afford fewer purchases, and if they owe on debts, they are far less likely to pay. Small-, medium- and large-sized businesses can only survive a certain degree of these adverse conditions, therefore the consumer bankruptcy rate necessarily leads to greater numbers of business bankruptcies.
When creditors to a company are having trouble collecting on debts, they can initiate an involuntary Chapter 11 filing. The debtor company is then given 15 business days to respond to the court notification of that bankruptcy litigation filing.
When you see no way out, contact the Law Offices of David W. Brown, PLLC
Bankruptcy does not have to keep you in the dark. With thousands of cases successfully won, the consumer bankruptcy litigators at the Law Offices of David W. Brown, PLLC show you the light at the end of the tunnel. We serve clients in Pontiac and Lapeer. For a free consultation, contact us at (810) 356-0143 today.
