Bankruptcy is a lot more common than you might think. Two years ago, U.S. men and women, along with various business institutions filed 1,071,932 bankruptcy claims. Now, Business Insider reports that Caesars Entertainment, the owner of the opulent Caesars Palace casino in Las Vegas, intends to file Chapter 11 bankruptcy as well.
Caesars’ Likely “Restructuring Plan”
The entertainment behemoth seems to understand the nuances of filing — and how to use Chapter 11 bankruptcy and taxes to advantage. Unlike Chapter 7 bankruptcy for individuals, filing a Chapter 11 claim as an institution does not require companies to surrender liquid assets. It also does not offer the advantage of a “clean slate” per se. Instead, Chapter 11 bankruptcy enables large companies who are part of a “partnership, limited liability company, or corporation” to restructure their debt, according to Nolo.com. When applicable, businesses work closely with a Chapter 11 bankruptcy attorney to negotiate terms; in all likelihood, Caesars may be able to reduce some payments and lengthen repayment periods for others. The casino will remain in business throughout the process.
Chapter 11 Vs. Chapter 13 Bankruptcy
Chapter 13 bankruptcy can be another option for businesses, so how does it differ from Chapter 11? First and foremost, only individuals or sole proprietorships are eligible for Chapter 13 bankruptcy. That means larger corporations, such as Caesars, would not qualify, although it remains a valid option for small businesses. Under Chapter 13 bankruptcy law, debtors have a limited time to submit a potential repayment plan, over a span of no more than three to five years. The plan must be approved by a Chapter 13 bankruptcy attorney and court of law, and all other debts are typically discharged upon approval.
Do you have questions about Chapter 11 or Chapter 13 bankruptcy timelines? Talk to a Chapter 13 or Chapter 11 bankruptcy attorney to find out what your options are, and whether your company can benefit from debt restructuring through either Chapter 11 or Chapter 13 bankruptcy.