Representing Tucson Businesses in Complex Chapter 11 Bankruptcy Filings

Tucson has thousands of businesses within the city of different types, sizes, and industries. Each of these businesses generally has one thing in common, however – that they want to succeed and profit. Unfortunately, many different circumstances can lead companies large and small to struggle, and their debts might begin to exceed their revenue and liquid assets. Some businesses might be able to recover and turn the situation around, while others might need to seek out an external solution.

The law acknowledges that companies can face financial difficulties just like consumers, so it extends the right to file for bankruptcy to businesses, as well. Some business owners might simply want to liquidate and discharge their debts, so they can move on to another venture, and Chapter 7 bankruptcy suits this situation. However, if a company needs financial relief but does not want to close its doors, there is another option – Chapter 11 bankruptcy.

Chapter 11 is a highly complex process, and it is almostimpossible to comply with the rigorous requirements of this type of case without legal assistance. It is essential for companies to have the guidance and representation of an experienced Tucson Chapter 11 bankruptcy attorney from the very beginning until the very end of a case. If your business is considering bankruptcy, do not wait to discuss the matter withYusufov Law Firm PLLC in Tucson today.

Chapter 11 Bankruptcy Overview

A Chapter 11 bankruptcy – sometimes called business reorganization or business restructuring – is primarily designed to help struggling businesses reorganize their financial affairs to be able to continue operating. A Chapter 11 bankruptcy may also be used by individuals who do not operate a business, but a Chapter 11 is only advisable for such individuals if their debts are too high to qualify them for Chapter 13 bankruptcy, and they do not qualify for or, for other reasons, cannot file for Chapter 7 bankruptcy. It is rare for consumers to file a Chapter 11 case unless they have extenuating circumstances, so this kind of case is most commonly associated with corporate bankruptcy.

One of the policies underlying Chapter 11 bankruptcy is that it is better to enable a business to continue operating instead of simply liquidating, as this preserves the going concern value of the business. In addition, it preserves jobs and avoids the other detrimental effects on the local community that usually result from the dissolution of a business. As a result, Chapter 11 bankruptcy offers many options and significant flexibility to a business debtor that are not available outside of bankruptcy.

Chapter 11 Bankruptcy Benefits

In addition to the automatic stay, which prevents most creditors from taking any collection action against the debtor, a Chapter 11 bankruptcy enables the debtor business to:

  • Eliminate or in other ways modify unsecured debt
  • Reduce secured debt
  • Reduce interest rates on secured debt
  • Reject unfavorable contracts
  • Obtain new financing by offering the lender incentives that are not available outside of bankruptcy, such as a lien with priority over all pre-existing liens
  • Use, sell, or lease property of the estate, even if the property is subject to a lien
  • Recover transferred property
  • Avoid preferential, fraudulent, and certain other transfers

Even if there is no intent to reorganize a business, a Chapter 11 bankruptcy is often beneficial to allow for an orderly liquidation of the business. If the business can continue operating and producing income, or if there are assets unencumbered by liens,