Filing for bankruptcy may have already created a bit of uncertainty about the future of your small business. Changes to your financial situation throughout the process may cause other problems that require you to modify your bankruptcy filing.
Understanding when a conversion from Chapter 11 bankruptcy to Chapter 7 is usually approved can help you assess whether or not you should modify your filing.
Conditions for a conversion
Wanting to modify your filing is unfortunately not enough to change it. However, according to the United States Courts, there are certain conditions under which courts will consider a conversion including the following scenarios:
- You cannot meet requirement deadlines
- You cannot effectively rehabilitate your business
- You cannot develop a workable restructuring plan
- Your estate continues to suffer from financial mismanagement
The process of conversion requires you to gather all applicable information such as your original filing documents, a timeline of your business’s financial affairs and other financial schedules. A thorough explanation of your need to convert from one bankruptcy protection to another should also highlight how a change would benefit both your business and its creditors.
Rebuilding financial independence
The months and years following your bankruptcy filing are an opportunity to develop and strengthen good financial habits. Some of the things you can do to strengthen your organization’s financial independence include adequately planning for taxes and refining your company’s structure.
Establish protocols for authorized access to your company’s finances to reduce the chances of mismanagement. This can also increase transparency, which will protect against financial missteps that may cause ongoing problems. Regularly analyze financial expenditures and examine best practices for organizational finance to continually improve your methods.