Lawyer Monthly - November 2022

over time or obtain other modifications to provide necessary relief. What distinguishes Chapter 7 and Chapter 11 bankruptcy, and what determines whether one or the other is best for a business’s needs? The distinction between a Chapter 7 and 11 boils down to one simple word: control. In a Chapter 11, the debtor retains control of their operations and, subject to some oversight, maintains the day-to-day operations in their normal course. In determining which path is right for you, the first question is whether the business wishes to continue or shut its doors. If the former, then a Chapter 11 would be preferable. If the latter, the business must evaluate the costs, timing, control and other factors between the two. What must a business be aware of as it prepares to file for bankruptcy? What particular preparations should it make? A business must be cognizant of the timing to its bankruptcy. Too late and even the most skilled bankruptcy practitioners cannot resurrect a doomed case. Too soon and the exit path may not have fully developed. A second consideration in particular would be to going into the bankruptcy with a sufficient ‘war chest’ to fund the necessary work. At a bare minimum this means seeing the main bankruptcy through, but it should also mean anticipated adversaries or contested matters with particularly contentious creditors to ensure there is enough to keep the professionals engaged. THOUGHT LEADER 69 Bankruptcy is often seen as a failure or measure of last resort, when in fact for many it can be a great opportunity.

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