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Why we see repeat bankruptcy cases in Chapter 11

HomeArea of Law BankruptcyWhy we see repeat bankruptcy cases in Chapter 11

When the company decides to file for Chapter 11 bankruptcy, it means the business is in debt. Some creditors need their money, and the company needs revitalization.

Hence, it is a plan proposed by the debtor to reorganize the business to keep it alive and simultaneously pay back the creditors.

Theoretically, the plan should have enabled the company to revive itself completely.


However, practically, this does not happen.

There are more chances of the same company filing bankruptcy cases in chapter 11 again and again. It is not worth it.

What is the need to go by the road again and again without any profit?

There can be two acumens associated with it:-

1. The reason for the same can be associated with not taking care of the company’s operation.

If the company’s operation keeps at bay, how can it address the various issues? It is the operation procedure that, if duly discussed by the company, leads to better results. It will result in the company gaining more profits than before.

2. Another reason can be associated with financial fixes.

The profit of a company is a lot dependent on sound finances. Even after reorganization, if the company cannot fix its financial structure, it will lead to the same economic turbulence.

These two acumens result in the repetitive filing of Bankruptcy chapter 11 by the same company.

Consult Lawyer

If your company is facing bankruptcy and filing for Chapter 11, you should consult a bankruptcy lawyer.

An experienced bankruptcy lawyer should explain all the legal know-how of filing bankruptcy cases and help you to plan a proposal for reorganizing your company.

For help, you can consult a lawyer.


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