business bankruptcy chapter 11
What is the difference between Chapter 7 and Chapter 11 bankruptcy?
Many local businesses and large businesses close, and I want to know a little more in depth why this is and what it means.
Ch 11 is a reorganization of debts, many businesses that are file a bankruptcy Ch 11 because they plan to stay in business and wish to continue to operate. Ch 11 can really help a business. Example, if the company had a debt, so it could not obtain short-term loans for operating expenses that might have trouble meeting payroll and maybe need to start laying off employees. If a Ch 11 allows the company restructure its cash flows, it does not need to lay off employees, and can therefore continue to produce goods and services that bring in revenue. Not all companies that produce Ch 11 manage to remain in business. Especially in the current market difficult credit, a company may fail to Ch 11 in reorganizing its debt structure (just like homeowners who are struggling to refinance their mortgages simply because lenders are more reluctant to lend money now than they were). Then, he may need to convert Ch Ch 11-7 and close its doors. Ch 7 means the business is definitely going out of business. A company can not file Ch 7 and stay in business. When a company files Ch 7, it closes its doors and all its assets are sold to pay creditors.
Herbst Gaming filed for Chapter 11 US bankruptcy Great place to stay
