If you are a business owner, you undoubtedly already know how difficult the COVID-19 pandemic has been for many companies. Whether your business is big or small, the financial fallout from the coronavirus undoubtedly impacted you. In many instances, this led business owners to fall behind on payments and accrue massive debts.
For those dealing with these debts, it may feel like there are few options. Loans and financial assistance earmarked for COVID-specific relief have largely dried up, and many proprietors are struggling to repay those loans, much less maintain operations.
Don’t let this discourage you – you do have options! If you haven’t already considered Chapter 11 bankruptcy after the pandemic, here are seven reasons to do so:
Allowing Your Business to Remain Open
The chief benefit that Chapter 11 bankruptcy offers is allowing your business to remain open throughout the process. Given how hard it can be to open and run a business, the option to remain in operation can be a huge relief. You will not have to worry about losing the reputation and goodwill that your business has built within your South Florida community, nor will you have to deal with the costs and stress of closing and attempting to reopen later. With court supervision, your business can remain open throughout the bankruptcy process.
Streamlining Operations and Increasing Efficiency
During your bankruptcy, you will have the opportunity to take a close look at the financial records of your business. In doing so, you and your team can determine which departments, features, or offerings are not performing. These elements can then be streamlined or dropped entirely.
Why should you pare down the goods or services that your company offers? During these difficult times, smaller menus are commonplace everywhere from restaurants to automotive garages. The same trick can work for you. Use the careful consideration of bankruptcy to trim wherever possible the things that cost without yielding a profit. These streamlined offerings let your team focus on what works – and brings in revenue.
Keeping Creditors Off Your Back
Perhaps the most satisfying benefit of filing for Chapter 11 bankruptcy after the pandemic is the relief of harassment. Many business owners who deal with major debt also deal with creditors calling and sending physical mail almost constantly. These correspondences can easily cross the line into harassment – and can make life miserable both at work and at home.
During bankruptcy, these creditors are no longer able to move forward with recovering debt. Should they continue to contact you, you can direct them to speak with your lawyer regarding the terms of your bankruptcy. For many business owners, this is enough of a reason to consider filing for bankruptcy!
Room to Negotiate Ongoing Contracts
Ongoing contracts can be a major source of stress for business owners in debt. A Chapter 11 bankruptcy can provide an opportunity to reexamine those contracts carefully. Those with favorable terms or whose lenders are willing to renegotiate may be kept, with more favorable terms moving forward. Others may be rejected. Since most corporate partners do not want to see lucrative contracts rejected as a result of bankruptcy, they are more likely to be willing to negotiate than they might have been prior to the bankruptcy process.
Flexibility to Maintain Operations
While the funds that were initially set aside for COVID-19 relief have largely been dispersed and used, there are still funds available through numerous avenues that may help offset your business’s financial difficulties. The focus of these funds is helping businesses to maintain their regular operations – such as paying employees, performing minor repairs, and other everyday company expenses – while moving forward with bankruptcy.
For more information about finding this type of financial assistance during Chapter 11 bankruptcy after the pandemic, speak with a Florida bankruptcy attorney.
Unload Property Without Fear of Liens or Interest
Businesses may own property that is difficult to sell during stressful financial situations, such as the months and years after the COVID-19 pandemic. In these cases, bankruptcy is once again beneficial. During bankruptcy, the contracts under which businesses own or use these properties can be either renegotiated or rejected. This frees the business and its owners from financial responsibility related to those properties.
Perhaps more enticing, though, this also prevents liens and the added financial stress of interest payments related to the properties. This makes bankruptcy a great time to reevaluate the necessity of property that may no longer be beneficial to the business.
Potential Improvement to Loan Terms and Access
For those dealing with overwhelming debt and considering Chapter 11 bankruptcy, the thought of taking on new loans may not be very appealing. However, there are instances when it might be both necessary and smart – and Chapter 11 bankruptcy might actually help make it happen.
Businesses participating in a Chapter 11 bankruptcy may be eligible for a type of financing known as debtor-in-possession. This financing – if approved by the court – can help bankrupt businesses obtain new funding for necessities. This is because the loans receive priority of repayment over those acquired before the bankruptcy, making the terms much more appealing to lenders.
Of course, no new loans or lines of credit should be taken on without both the approval of the bankruptcy court and the advice of your legal representative. Be sure to speak with your attorney before appealing to the court to ensure that you have a case.
Need Help? Let Us Guide Your Chapter 11 Bankruptcy After the Pandemic!
If you are tired of feeling like you will never recover from the financial impact of the pandemic, stop trying to go it alone. You and your team deserve to put your full focus into running your business. Let our team help by guiding your Chapter 11 bankruptcy after the pandemic!
At the Van Horn Law Group, we offer financial and legal advice that has helped numerous Florida business owners just like you. We can help you make the right decisions to get your business back on its feet, or make alternate plans for the future. Whatever you decide to do, our experienced team will be with you at every step of the journey. Give us a call today to learn more!
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This article originally appeared here and was republished with permission.