It’s only in the United States, but should Canadians consider what Chapter 11 offers to companies that can’t see an alternative to closing their doors forever? What if we used Chapter 11 as a template, as a tool to determine whether or not we have some hope of rebuilding a declining business? While not a solution for everyone – Chapter 11 provides the ability to make a proposal that could see you or the company back on track again.

While Chapter 11 in the United States is about bankruptcy, admitting that you don’t have enough equity to continue without some "business reorganization." It offers one alternative that has seen many companies survive. If we used that concept and made a conscious decision that we couldn’t proceed any further without help – think of what might happen. We could search out and find a team of professionals that would help us rebuild our business, while guiding us through the financial implications we might face.

If we thought about Chapter 11 as a tool, a concept to help reconstruct an ailing business, and we considered our alternatives I wonder how many of us would ask for the help of experts to help us retool our aging and often unhealthy business? While not a solution for everyone – Chapter 11 as a concept and a process to rebuild, provides us with the ability to make a proposal that could see you and the company back on track again.

With Chapter 11 you must propose a payment plan, but in a Chapter 11 situation, the creditors (or your team) also have an opportunity to vote on your plan. If enough creditors (or your team) vote in favor of the plan it is usually approved. I’m not suggesting that you actually go into bankruptcy, or that you work out a payment plan – what I am suggesting is that if you use Chapter 11 as an analogy – you can not only survive, you can thrive with the help of your team! As entrepreneurs, you work alone, trying to cover all the bases. By using a Chapter 11 approach, you can ask and get the help you need before it’s too late. At ConnectUs we call it a Solutions Team!

An approved Chapter 11 plan, essentially rewrites many of the contracts the debtor has with the creditors and the court then sends everyone back out on the street to live under their new arrangements. Imagine having the chance to actually start over, without losing all you gained originally? With a team of proven professionals, an ailing business would have the chance to re-educate themselves, to re-think their corporate strategy and with the help of that team, position themselves for long term growth.

Using the Chapter 11 template, many cases do succeed, usually because the business, at its core, is a genuinely profitable business that needs some time to reorganize, perhaps shed some unprofitable operations, and liquidate underused assets. It’s hard to determine what to keep and what to throw out. Consider the concept of Chapter 11 as utilizing the team who can help make the decisions that will ultimately bring the company back to life.

How can you determine if Chapter 11 is a tool to consider for your business rebirth? Call us – we have the template and the professionals who are ready and willing to become part of your team.