Workers Compensation: Your Safety Net

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Workers Compensation: Your Safety Net

You put your heart and soul into your job, so it seems only fair that you should be protected from harm while you’re there. Most good employers do go out of their way to provide safety training and equipment to keep their workers safe and protected from any hazards. Federal agencies, like the Occupational Safety and Health Administration, also have standards in place for employers to follow to keep their workers safe. However, sometimes accidents happen anyway, and when they do, workers compensation is meant to be your safety net. Most of the time, if you follow your company’s procedures for filing a workers compensation claim, you’ll be paid with no trouble. However, I know from experience that it isn’t always that easy. I started this blog to help you learn what to do when your company or their insurance company denies your workers compensation claim.

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How a Chapter 11 Can Be Converted to a Chapter 7 Bankruptcy

If you are a business owner who is struggling financially, you will be able to file for Chapter 11 bankruptcy if you believe that you can reorganize your business to be able to save it. However, there are some circumstances where a Chapter 11 bankruptcy is converted into a Chapter 7 bankruptcy by the courts.

How Chapter 11 Works

For personal bankruptcy, the party filing for bankruptcy has their debts managed by a trustee. However, if you are filing for Chapter 11 bankruptcy, you will become a "debtor-in-possession." However, if you later decide that you will not be able to pay off your debts, you may be able to have your Chapter 11 converted into a Chapter 7. Before making any huge decisions, you will want to consult with a bankruptcy attorney about this.

What Happens After a Conversion

Once you have converted your bankruptcy to Chapter 7, a trustee will take control of your debts and the paying off the debts. They will take each of your business assets and liquidate them. These assets will then be distributed in a manner that is fair for all the creditors. 

How the Courts Will Respond 

The courts will try to determine the likelihood that the estate will continue to shrink. The courts will look at the cash flow and the depreciation of assets. The sooner that the assets are sold, the more that these assets can be used to pay down debts. Also, with a lack of cash flow, you may find it difficult to maintain your assets and this might further cause them to decrease in value.

Involuntary Conversion

In most cases, a creditor will not want you to file for Chapter 7 bankruptcy. However, there are some cases where you might be forced to convert to Chapter 7 because a creditor believes that this will improve their position. If you do not want to convert your bankruptcy, you should bring this up with your attorney.

The courts will sometimes forcibly convert your bankruptcy to Chapter 11 because they believe that you are simply reorganizing at the expense of your creditors and that you will not be able to make your business profitable. This will typically mean that you will be forced to close your business. Based on the financial information you are presenting to the court, your attorney will need to make a case for why you will still be able to save your business.