How are Outstanding Debt Obligations Impacted by Chapter 11 Bankruptcy?
Business bankruptcy attorneys in Los Angeles are available at Weintraub, Selth & Nguyen, APC to guide you through the complex process of business bankruptcy. If you are unfamiliar with the business bankruptcy process, Chapter 11 business bankruptcy can be very complex. Our business bankruptcy attorneys in Los Angeles, however, are extremely familiar with the process and have answers to all of your questions.
In Chapter 11, your business will undergo a period of financial consolidation and reorganization. This will help you emerge from financial challenges and equip you to turn a profit in the future. But you may wonder: “What does a Chapter 11 filing mean for the financial obligations of my business? How can I put the company in the best possible position to exit bankruptcy?” These are questions that can be answered by contacting our experienced business bankruptcy attorneys before choosing bankruptcy for your business.
As a business owner, you know that there are many types of debt; some debt is incurred one time while other debt is accumulated over time and on an ongoing basis. 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:
- Bank loans
- Debts to suppliers
- Payroll taxes
Negotiating your outstanding debt is best done by a qualified business bankruptcy attorney because debt can be extremely complex. 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 carefully observed. Because we are so experienced in dealing with the IRS, banks, creditors, and others that you may owe, we can efficiently guide you through this process. Our assistance may help you run your business rather than try to learn the complex steps necessary for debt negotiations.
Lawyers to Assist with Consolidating Debt and Negotiating Existing Leases
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.
There are many options for modifying commercial leases during a Chapter 11 restructuring as well. 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. Having an attorney on your side during these negotiations may dramatically improve your chances of success.
Business Taxes and Chapter 11
Filing for Chapter 11 protection stops all collection actions, including liens and levies filed by the Internal Revenue Service immediately. 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 recovers.
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 our business bankruptcy law firm today to explore your options for dealing with your business debt obligations: (310) 878-4399