Las Vegas Chapter 11 Bankruptcy
Chapter 11 Reorganization
Chapter 11 bankruptcy is commonly used by businesses to restructure and reorganize their debt. It’s a flexible option that can work for both small and large companies. Businesses facing unexpected costs, declining revenue, or cash flow issues may benefit from a Chapter 11 filing. The goal is to restructure the business and its obligations, allowing it to continue operating and regain profitability, rather than liquidating.
Even well-planned businesses can face unforeseen challenges that lead to financial trouble. Chapter 11 provides an opportunity to adjust and recover. Many large companies, like General Motors, Station Casinos, and the city of Detroit, have used Chapter 11 to survive and restructure during difficult times. It’s a powerful tool that could help your business get back on track.
Advantages to Chapter 11 Bankruptcy
When a corporation files for Chapter 11 bankruptcy, it can choose to assume or reject its executory contracts and unexpired leases. This flexibility helps the company reduce costs and improve profitability, especially if it’s burdened by unfavorable contracts or leases. Additionally, filing for Chapter 11 triggers an automatic stay, which halts creditor actions such as collections, judgments, repossession, and foreclosures. This provides the debtor company with some breathing room while it develops a feasible reorganization and repayment plan for its creditors.
Individual Chapter 11 Bankruptcy
Chapter 11 bankruptcy is not just for corporations; individuals can also file for it. It offers several advantages over other types of personal bankruptcy, such as Chapter 7 and Chapter 13. Unlike Chapter 7, which involves liquidation, Chapter 11 allows individuals to keep their assets and repay creditors over time. It also offers the option to restructure loans on rental properties, potentially reducing the principal to market value, lowering monthly mortgage payments, and turning those properties into income-generating assets.
Another key benefit of Chapter 11 is that it doesn’t have the debt limits found in Chapter 13. For example, individuals filing under Chapter 13 cannot have more than roughly $1.1 million in secured debt and $360,000 in unsecured debt. Those with multiple rental properties often exceed these limits and cannot file for Chapter 13. However, under Chapter 11, individuals can restructure the debt on several properties at once, making it a valuable option for those with significant real estate holdings.
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