Do you know what to expect when your business files Chapter 11 bankruptcy? Part 3: Are all the key members or shareholders on board with filing bankruptcy?
Part 4: Are all the key members or shareholders on board with filing bankruptcy?
If there is more than one owner in a company that may be a candidate for Chapter 11 bankruptcy, a majority in voting interests must approve bankruptcy as a the right course of action. Business owners should discuss the needs for restructuring with all owners if possible but most importantly, with all owners who have the voting power to authorize a bankruptcy filing for the company. After an initial consultation among an attorney and one or a few of the owners contemplating a Chapter 11 bankruptcy for a company, it is important to bring everyone to meet with the company’s bankruptcy lawyer to discuss the reason Chapter 11 is necessary, to thoroughly explain the Chapter 11 bankruptcy process, to answer questions of all of the owners, to secure the necessary agreement or resolution among the owners to authorize the filing of a Chapter 11 bankruptcy case and to appoint an owner or key employee to regularly communicate with the bankruptcy attorney and at the attorney’s instruction and advice, perform the company’s duties in bankruptcy court.
DISCLAIMER: The information contained above is general in nature and provided as reference material only. This information is not specific legal advice about the application of the law to a particular fact scenario, nor does it replace (or purport to replace) any requirement to obtain specific legal advice. This information is not intended to and does not create an attorney client relationship. If you require legal advice, that advice should always be obtained from a qualified legal practitioner in your jurisdiction.