If you’re a business contemplating filing bankruptcy in Las Vegas, what do you need to know about business bankruptcies and the debtor-in-possession (“DIP”) concept?
First off, there is a distinction between business bankruptcy and personal bankruptcy.
Second, a business bankruptcy can be filed under Chapter 7 or Chapter 11. Chapter 7 is liquidation. Chapter 11 is reorganization, i.e., if you intend for your company to continue operating. (Though in some situations, Chapter 11 can be used for liquidation as well.)
Third, in a Chapter 11 bankruptcy, there is something called the “debtor-in-possession.” This means that the debtor company’s owner or management continues to run the company and make management decisions. This concept is actually unique to the United States. In other countries, and in the past in the U.S., a trustee was always appointed to run a company if it filed for bankruptcy. And this still is the case where fraud or criminal activity is involved on the part of the debtor. However, the ideal debtor-in-possession scenario envisions a company that is essentially well-run but that got itself into some debt problems. And it uses Chapter 11 to enable it to move forward, continue operating and continue employing people as well.
Fourth, you really need to retain an experienced Chapter 11 Las Vegas bankruptcy attorney if you do plan to file for business bankruptcy. They can help you navigate the process and understand the appropriate role of a debtor-in-possession.
If you’re running a Las Vegas business and think you may need help filing bankruptcy in Las Vegas, please contact an experienced Freedom Law Firm bankruptcy lawyer for a free consultation by calling 702-745-8584.