There is no doubt that bankruptcy, whether for an individual or for a business, can provide an entity with some helpful opportunities to manage its overwhelming debts. Many New York business and corporate entities choose to file for Chapter 11 bankruptcy so that they may continue their operation as they re-establish the strength of their operations through business reorganization. However, several factors can prevent a business bankruptcy under Chapter 11 from moving forward and this blog post will look at just a few of those issues.
Chapter 11 bankruptcy is not available to a business if, in the 180 days before it files its petition, the business had filed a prior bankruptcy petition and had it dismissed by the court due to one of several reasons. If the petition was dismissed due to the debtor’s failure to appear in court or respond to court requests, a subsequent bankruptcy petition may be rejected.
A Chapter 11 petition may also be denied if, in the 180 days before filing, the filing entity fails to get credit counseling from an approved organization. Credit counseling is an important step in the bankruptcy process as it educates debtors about their options for recovery and helps them become aware of how their financial situations became unruly prior to filing for bankruptcy.
There are other ways that a business’s petition for Chapter 11 bankruptcy may be denied, and readers of this post should not rely on this information as a complete representation of the topic as a whole. Consultation with a bankruptcy attorney is an important part of preparing for a personal or business bankruptcy filing as a private lawyer can advise his client on the topics that are relevant to the client’s specific case.