When business bankruptcy in Newport Beach California is being considered by a small business, it is important that the business owner be aware of the process and the consequences of this filing. This form of business bankruptcy in Newport Beach California allows partnerships, limited liability companies or corporations to restructure their debt, as well as for sole proprietors who owe too much debt to qualify for Chapter 13 bankruptcy.
In Chapter 11 bankruptcy proceedings, a plan to reorganize the business is submitted for approval by the bankruptcy court. Through this process, the small business can modify payment terms so that the business can maintain its operations and become profitable again. Liquidation may also be included with this process in order for the business to decrease its debt load.
In order to provide a more affordable method for small businesses, the Chapter 11 bankruptcy code provides a number of ways to reduce administrative and legal expenses. For example, small businesses do not have to have a creditors’ committee, making the process much more affordable. This committee represents the creditors but is paid by the debtor. Additionally, small business owners do not usually have to prepare a disclosure statement. This statement is typically prepared by the business and submitted to the court for approval and for review by the creditors. Not being required to submit this form also saves time and money since reorganization can occur without having to submit the statement which takes considerable time to prepare.