In these financially troubled times many owners are confronted with the dire choice of saving their businesses or their personal assets. Saving a business can include a reorganization. Your business can reorganize with a bankruptcy (Chapter 11) or a creditor workout. In deciding how to reorganize your business, you should consider the differences between a Chapter 11 bankruptcy and a creditor workout, including:

  • Timing. A workout can be faster as a bankruptcy has many notice and timing requirements.
  • Scope. While a bankruptcy involves all creditors, a workout need only involve those parties necessary to reorganize your business.
  • Cost. Workout costs are more easily controlled and usually are less than a bankruptcy.
  • Flexibility. A workout may give you more flexibility as a bankruptcy has rules and requirements that must be followed.
  • Notoriety. All bankruptcy filings are in the public record and require public disclosures and specific notices, while a creditor workout can be more discrete and confidential.
  • Disruption. Business operations can be more easily controlled and managed in a workout with less creditor notice and scrutiny.
  • Lawsuits. Unlike a bankruptcy, a workout will not stop lawsuits or judgment enforcement actions unless the creditor agrees to a stay.
  • Enforcement. A bankruptcy can stop, cramdown and otherwise bind creditors, while a workout requires the individual creditors involved to agree.
  • Ownership. A workout is more apt to result in your retaining ownership than a bankruptcy that often provides the reduction or exchange of debt for equity.
  • Flexibility.  A failed creditor workout can revert to a bankruptcy.

Once you decide to reorganize your business, you need to evaluate how to best do so. The attorneys at Brooks, Tarulis & Tibble, LLC can help you in making and fulfilling your decision to reorganize your business. Please contact us with any questions or issues.

info@NapervilleLaw.com

This Brief is designed to provide our friends and clients with information regarding the various subject matters covered, it is not designed to take place of legal, accounting or other professional advice. If expert assistance is required, the services of a competent professional should be sought. This memorandum may constitute advertising under the rules regulating Illinois attorneys.

The post Business Reorganization appeared first on Naperville Law.