What You Need to Know About Bankruptcy, Part 2: Chapter 11
Chapter 11 is referred to as the reorganization chapter and is commonly used by both contractors and owners when the intent is to continue operating their business and not close their doors entirely.
As we discussed in Part I of this article series (Roofing Contractor, August 2001), Chapter 11 is referred to as the reorganization chapter and is commonly used by both contractors and owners when the intent is to continue operating their business and not close their doors entirely. It is not unheard of for an individual with significant debts to file under Chapter 11, but it is usually used for businesses.
During the stay the debtor is not relieved from all responsibilities. He or she should work on increasing productivity and cash flow, as well as attempting to remedy the problem or problems that caused the initial filing. It is also wise for the debtor to attempt to salvage relationships with suppliers and subcontractors. This can be done by assuring them that the debtor intends to remain in business and use their services in the future.