We often discuss consumer bankruptcy on our blog, but bankruptcy is also an option for businesses that are struggling with debt.
In June, the YMCA of Metropolitan Milwaukee filed for Chapter 11 bankruptcy protection, stating that the organization was $29 million in debt.
Today, the YMCA filed its plan of reorganization in U.S. Bankruptcy Court and said the plan will leave the organization “better-positioned to carry out its vision of a stronger, healthier Milwaukee where families of all incomes and backgrounds truly thrive.”
Chapter 11 bankruptcy is a process by which businesses can reorganize without the heavy debts that they carry. It involves proposing a plan that would allow the business to be profitable post-bankruptcy while at the same time keeping creditors at bay.
The difference between a Chapter 11 bankruptcy and a Chapter 7 bankruptcy is that in Chapter 11, the business stays in business with plans to once again become profitable.
The reorganization plan details the future plans for profitability as well as how the debts will be treated, either discharged or partially paid back with installment payments. Creditors are often willing to compromise with businesses during the Chapter 11 process.
Under the YMCA’s reorganization plan, the organization plans to sell several of its suburban real estate properties, reduce staffing and cut certain programs and services.
A statement from the YMCA said the organization hopes to re-emerge from bankruptcy debt free as soon as next month.
Chapter 11 bankruptcy is most common with larger businesses but it can also work for smaller businesses as well. For more information on the process and whether your Wisconsin business may qualify, speak with an experienced bankruptcy attorney in your area.
