Do you lose assets in Chapter 11?
You’re considering filing Chapter 11 bankruptcy for your business, but you’re hoping the company can still thrive in the future, so you naturally do not want to lose the assets you already own. You just need help with your debt. Are you going to have to sell off your assets — or are the lenders going to take them back — if you use Chapter 11?
In short, no, you will not lose your assets. That’s what happens in Chapter 7 bankruptcy, and it is one of the biggest differences between the two.
With Chapter 7, the sale of assets helps pay off the debt that is already owed. With Chapter 11, that debt is restructured and reorganized. The company keeps its assets and makes more affordable payments under this new plan.
In fact, it would be in direct conflict with the lenders’ own desires if you had to sell your assets under Chapter 11. The goal is to make your company profitable and help you survive. That’s how the lenders get their money back in a long-term sense. If you had to sell your assets, the business wouldn’t be able to make anything, and they’d never see that return. It would be a losing situation for all parties. With Chapter 11, you can seek a good outcome for both you and the lender in the future.
If you are considering bankruptcy, you can see just how important it is to understand the terms of whatever type of filling you decide to use. They have a vast impact on your future success.