- Gross mismanagement
Despite having the ability to continue operations, you will lose absolute control over certain decisions. As the U.S. Courts point out, the court must approve of certain business actions, such as employing appraisers, attorneys or accountants for the bankruptcy case. The court must also give you the green light for either breaking a lease or entering into a lease during this time.
Some people and businesses going through bankruptcy may wish to sell assets. However, if you have filed for chapter 11, you will need the court’s approval if you play on selling real estate or other property. Additionally, if you have a secured financing situation that would allow you to borrow against the loan, you would need the court to agree to it.
Lastly, you will have to seek approval if you want to either expand or close your business. Essentially, any major decisions you would make regarding your business or its assets must be presented to the court prior to taking action. Failing to do so could undermine your bankruptcy case.
While this information may be useful, it should not be taken as legal advice.