In some business situations, financially it makes the most sense to file for Chapter 11 bankruptcy in order to reorganize.
A promising technology company in Ybor City, Florida, recently was one company to file for reorganization under the protection of Chapter 11 bankruptcy. According to the business bankruptcy filing, Savtira Corp., lists assets between $1 million and $10 million and liabilities between $10 million and $50 million.
An official with Savtira, a B2B cloud e-commerce business, stated the company is confident it will emerge from this bankruptcy fully funded and ready to continue to operate.
According to the e-mail, which was sent by the chief executive officer to the Tampa Bay Business Journal, the company’s cash-flow problems are expected to only be temporary and there are already public and private entities in other states that have made offers to help under the condition that the company relocates.
In general, a Chapter 11 bankruptcy is often a debt relief tool used by businesses that have run into tough financial times. Under this type of bankruptcy, the business tries to come up with some sort of repayment plan in order to reorganize existing debt.
In the end, with this type of bankruptcy filing, the ultimate goal is to match the company’s debts to its assets, which is also often done by discharging unsecured debts that exceed the value of the business.
Of course, while this type of filing can help to keep a company in business, the truth is that the process to file and create a repayment plan can still be quite tricky, which is why it’s a good idea to contact a bankruptcy attorney who can help make sure things run as smoothly as possible.
Source: Tampa Bay Business Journal, “Savtira files for Chapter 11 bankruptcy reorganization,” Margie Manning, April 30, 2012