Reducing Illinois Corporate Debt Options

What to Do if You Have Business Debt in Illinois | Corporate Debt Options

Video by Attorney Kevin O'Flaherty
Article written by Illinois Attorney Kevin O'Flaherty
Updated on
October 9, 2019

If your business’ debts are threatening its continued operations, you should consult with your attorney about pursuing one of the following courses of action to either restructure your business’ debt or obtain a fresh start without incurring personal liability for your business debts:

  1. ​​Negotiation with creditors:  This is often the most efficient way to solve your business’ problems.  If your business files for bankruptcy or dissolves, your business’ creditors face the risk of being left with nothing.  They usually have incentive to negotiate a long-term payment plan that that will allow your business to survive.  Often they will even agree to reduce the amount of your debt.
  2. Restructuring your company’s debt through Chapter 11 bankruptcy:   In a Chapter 11 Bankruptcy, your business can work with your creditors to reorganize your debt and allow your business to continue to operate.  Chapter 11 bankruptcies can be prohibitively expensive to many small business owners.    However, they offer two important tools to debtors.  First, during the pendency of the bankruptcy, creditors are not allowed to pursue their claims against your business.   Second, reorganization plans can be confirmed by the court even if certain creditors vote against them.   Although a Chapter 11 bankruptcy does require the debtor business to negotiate with its creditors, the debtor’s limited ability to cram down a plan over creditor objection and the automatic stay of creditor legal action can improve the debtor business’ negotiating position and force reluctant creditors to come to the table.gg
  3. Liquidating your company through Chapter 7 bankruptcy:  In Chapter 7 Bankruptcy the business’ assets are liquidated by the trustee and distributed to the business’ creditors.  The business ceases to exist and corporate debts are discharged.
  4. Voluntary dissolution:  Voluntary dissolution is a process whereby the company itself, rather than a bankruptcy trustee, liquidates its assets and distributes them to creditors and shareholders in order of priority.  If a corporation is not properly dissolved, its shareholders and directors can become personally liable for its debts.
  5. Simply walking away from the business:  Closing your business’ doors without properly dissolving your corporation or LLC is only a good option for corporations with next to no liabilities or assets, as it will open up the business’ shareholders and directors to personal liability.

‍Your attorney will be able to assist you in determining which of these options is correct for your business, based on your business structure, the nature of its creditors and debt, and your goals.  In the next part of this series, we will discuss the different considerations that will allow you and your attorney to effectively choose between these five strategies.

Additional Financial Considerations
from Financial Experts

From Financial Experts

For many years, financial institutions have been creating a disservice to clients and the industry as a whole for years.
View More Professional Considerations

Presented By O'Flaherty Law

O'Flaherty Law is happy to meet with you by phone or at our offices in Chicago, Downers Grove, Elmhurst, Naperville, St. Charles, Lake in the Hills and Tinley Park, Illinois.

What to Expect From a Consultation

The purpose of a free consultation is to determine whether our firm is a good fit for your legal needs. Although we often discuss expected results and costs, our attorneys do not give legal advice unless and until you choose to retain us. Although most consultations are complimentary, some may carry a charge depending on the type of matter and meeting location.

Leave a Comment With Your Questions

Read more about

Bankruptcy

Disclaimer: Our articles and comment responses do not constitute legal advice and are not intended to create an attorney-client relationship.

Please contact us to schedule a free consultation for legal advice specific to your situation.

Here are some articles that may interest you

Contact us for a free consultation

Who We Are
We are your community law firm. Our Illinois Attorneys are committed to providing exceptional client service in a cost-effective manner in the areas of Family Law, Probate, Estate Planning, Civil Litigation, Guardianship, Criminal Defense, Corporate & Contract Law, Bankruptcy and Real Estate.
Schedule a free consultation

Some of Our Accomplishments

Best Child Support Lawyers in Chicago
DuPage County Probate Attorney
Kevin P. O'Flaherty
Rated by Super Lawyers


loading ...
Naperville attorney
DuPage County Probate Attorney
Business Articles & Podcasts

Subscribe to our mailing list

* indicates required