When planning to file a Chapter 11 bankruptcy for a business, many people wondered what they need to prepare before filing. WM Law, can file Chapter 11 bankruptcy petitions for businesses (and individuals too). We can file traditional Chapter 11 bankruptcies or use the newer Subchapter V form of Chapter 11 to try to move quickly and reorganize with less cost and fewer administrative tasks.
But any business that proceeds through bankruptcy needs certain information before or immediately after filing to make the Chapter 11 bankruptcy process more successful.
The information mostly needed to make the Chapter 11 bankruptcy process more successful is:
A business needs authority to file for Chapter 11 bankruptcy protection. Usually we are working with single member LLCs or corporations with a small number of shareholders. No matter how large or small your business is, we need the authority to file for bankruptcy and for someone to be the point person to sign Chapter 11 bankruptcy schedules, testify at the meeting of creditors, and cooperate with us and with the Office of the United States Trustee throughout the Chapter 11 process. We can prepare corporate authorizations.
Insurance is a must have for any business. There are all kinds of businesses who need Chapter 11 bankruptcy protection, from restaurants to fitness centers to retail, but all businesses should have insurance on any vehicles, equipment, and other assets (including real estate it owns), as well as worker’s compensation insurance and other insurance for employees.
3. Tax Returns and Financial Statements
Financial statements or balance sheets for the past few years are needed in order to evaluate whether a business will survive and thrive following a Chapter 11 bankruptcy filing. You will need to get us any financial statements or balance sheets– especially if they were submitted to banks or other creditors. Tax returns are necessary as well. It is critical for businesses going through the Chapter 11 process to know what their tax liabilities are at filing and to stay on top of all income tax filings as well as sales, use, payroll, and other taxes. We can help businesses in Chapter 11 file the necessary paperwork to employ accountants and stay on top of these requirements.
4. Projections for Income
Projections for income are often the hardest to prepare for businesses in Chapter 11, especially businesses who have been operating at less than full capacity for reasons including COVID-19 or lack of employee availability. Ultimately, a business in Chapter 11 need to cash flow in order to pay through a Chapter 11 Plan and convince creditors and a Bankruptcy Judge it can reorganize successfully.
While document requirements vary from case to case, these items are often the most critical. If your business is in crisis, please contact us to set up a free initial consultation and discuss if Chapter 11 is the right course of action. We’ll talk you through these items here and anything else you should know.