Do you know what to expect when your business files Chapter 11 bankruptcy? Part 4: Do you have all the professionals in place?
In addition to a company bankruptcy lawyer, there are significant accounting and reporting requirements that must be fulfilled while your company’s Chapter 11 bankruptcy is pending. The company may need to hire an accountant to help fulfill the reporting requirements and if the company has performed regular accounting and bookkeeping in the past, hiring an accountant and preparing the required monthly reporting are two best practices for companies in bankruptcy to begin during the restructuring process and to continue after bankruptcy is over. All professionals such as attorneys, accountants, brokers, auctioneers and real estate agents must be approved for employment by the bankruptcy court. This is usually a very straight forward process so it typically is completed through bankruptcy court without issue. Your company’s bankruptcy attorney should discuss and ask you about any needs for hiring other professionals to help you through the case.
If your company is involved in any court proceedings that will continue after bankruptcy, those matters and the attorneys handling the cases need to be discussed with the company’s bankruptcy attorney to make sure they are properly approved to continue to represent the company during the bankruptcy.
Professionals selling real estate, equipment or other items out of the ordinary course of business:
Your company may be trying to sell assets such as real estate, equipment, bulk or over-stock inventory or other items that are not necessary for the company’s continued operation. The professionals who are representing the company such as real estate or business brokers, agents, auctioneers or other fee or commission-based representatives selling company assets should be discussed with your company’s bankruptcy attorney. These professionals and the terms for their compensation are to be presented for approval by the bankruptcy court. Any asset sales that are not a normal part of your daily business operation but rather are removing assets in a manner “outside the ordinary course of business” need to be approved if secured while your company is in bankruptcy.
A Chapter 11 bankruptcy can offer a great amount of relief and assure the continued growth and existence of companies that are struggling to pay certain debts. The process can run smoothly and the restructuring can meet the goals of the company and its owners with proper planning and guidance. Consult an attorney at Clayson, Schneider & Miller, PC to discuss your company’s financial troubles to see if Chapter 11 is the right solution for your business.
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.