When a business owner files a petition for Chapter 11 bankruptcy, a common concern is what to say about the process to employees, customers, and business partners. Describing the process in positive terms can maintain the confidence and morale of all affected individuals and businesses. The best approach is to emphasize the terms “restructure,” “reorganize,” and “protect,”. We find that the word “bankruptcy”, said without explanation, tends to cause knee-jerk reactions, where some assume that the process will be a liquidation where the business shuts down, when in fact, the opposite approach is being used.

Focus on Chapter 11 Benefits

In a recent blog post, we focused on how a business owner can maintain the reputation of their business during the Chapter 11 process. Our discussion on that topic provides helpful guidance on how to discuss the legal process with employees, customers, and business partners, and how to maintain a positive approach and emphasize the benefits for the business. By taking responsibility for the business operations and financial issues and being transparent about those efforts and the Chapter 11 process, the owner demonstrates a strong commitment to saving the business, which typically garners trust and respect.

It is essential to explain that Chapter 11 contemplates continuation of business operations throughout the entire process. In addition, it is important to assure employees, customers, and others that the owner will remain in full control of the business throughout the process, which demonstrates a commitment to the future of the business. Emphasizing the difference from Chapter 7 bankruptcy can help to create a positive overall impression as well.

Another important point to emphasize is the protection afforded by the court through the automatic stay on collection activities. This protection enables the business owner to renegotiate and restructure debts to make them more manageable. Most likely, employees, customers, and business partners are already aware of the financial stress of the company, so emphasizing the Chapter 11 protection aspect should provide reassurance that the process will benefit business operations.

Emphasize Restructuring and Reorganizing

The business owner should emphasize that Chapter 11 provides a business with the opportunity to navigate financial challenges and emerge stronger and better positioned for a successful future. Through a Reorganization Plan developed by the owner during the process, the business has the opportunity to restructure debts and reorganize operations and create a more streamlined, efficient business structure that significantly benefits not only the business but everyone who counts on it.

While it is not necessary to explain details of the Chapter 11 process, providing an overview of the process and the expected timeline can help to alleviate concern and worry over what comes next. Addressing common misconceptions directly can prevent misunderstandings about the process as well. Employees in particular will be anxious about whether they will be able to continue working, and it may be necessary to address those concerns too.

Rely on Your Chapter 11 Lawyer for Guidance

Chapter 11 is the most complicated type of bankruptcy. Any business considering Chapter 11 bankruptcy should consult with an experienced Chapter 11 bankruptcy attorney and fully understand the process before proceeding with filing a petition. If you decide to proceed, your attorney helps you formulate an approach to talking about the process with your employees, customers, and business partners.

At Wernick Law, we focus primarily on assisting debtors in obtaining Chapter 11 protection and achieving debt restructuring and company-wide reorganization for Florida businesses. We also represent individuals in Chapter 11 proceedings and small businesses in Chapter 11, Subchapter V cases. In our practice, we apply more than 20 years of complex bankruptcy experience in providing comprehensive Chapter 11 legal services.

Our proven record of success is due to the high level of Aaron Wernick’s knowledge and skill, his steadfast dedication to protecting his clients’ interests, and his exceptional problem-solving and negotiation skills. Aaron successfully guides difficult cases to the finish line by focusing on what best serves the client and advocating for the client, while strategically and efficiently pursuing solutions that resolve disagreements and ultimately lead to confirmation of a reorganization plan.

Connect With an Experienced Florida Chapter 11 Bankruptcy Lawyer

Wernick Law welcomes Florida business owners and individuals to schedule a consultation by calling 561-287-3050 or using our contact form.