Business Bankruptcy Attorney Los Angeles
What Chapter 11 Means To Financial Obligations Of A Business
Under Chapter 11 bankruptcy your business will undergo a period of financial consolidation and reorganization and emerge better equipped to turn a profit in the future. What does a Chapter 11 filing mean for the financial obligations of your business? How can you put your business in the best possible position to exit bankruptcy? These are questions that can be answered by consulting an experienced business bankruptcy attorney before choosing a Chapter 11 bankruptcy filing for your business.
There are many types of debt, whether incurred one time or on an ongoing basis, that a business may face. Some types of debt are easier to negotiate than others. Understanding how and when to negotiate debt obligations during Chapter 11 is important in order to avoid problems with a bankruptcy filing. Your business debt may include:
- Leases
- Bank loans
- Payroll taxes
- Debts to suppliers
Negotiation on your outstanding debt is best done by a qualified business bankruptcy attorney. For example, the IRS holds all business owners personally liable for unpaid payroll taxes, regardless of the structure of the business entity. Seeking an “offer in compromise” with the IRS to reduce this debt burden is a complicated process filled with details that must be adhered to. Chances are you don’t have the time to run your business successfully while also negotiating with creditors.
Consolidation Of Debt
Chapter 11 enables a business to consolidate its debts for more manageable repayment over a set period of time. A skilled business bankruptcy attorney may be able to get your total debt reduced by a significant amount through careful negotiation with your creditors or have other debts discharged completely.
Negotiating Existing Leases
There are many options for modifying commercial leases during a Chapter 11 restructuring. It is in the landlord’s best interest to work with you so you can avoid Chapter 7 liquidation and potentially break the lease. If your business is in a financially unfavorable lease, your landlord may consider a modification that provides rent concessions while your business restructures and offers the landlord a catch-up on the back end of the lease.
Business Taxes and Chapter 11
A Chapter 11 bankruptcy filing stops all collection actions, including liens and levies filed by the Internal Revenue Service. Like all other creditors, the IRS must work out an acceptable payment arrangement. So, while a Chapter 11 business bankruptcy filing does not relieve tax obligations, it may provide you with additional time to pay. If back taxes are owed, a consolidation plan can be designed to stretch out tax payments over several years while the business gets on better financial footing.
Tax issues and Chapter 11 can be complex and should be reviewed by a reputable business bankruptcy lawyer who is familiar with the details of your case. We offer a free consultation if you are considering filing Chapter 11 bankruptcy for your business. Call today to learn what options you have for your business.
