When your business has debts to handle and you’re not sure if you can make ends meet, it may seem like you’ll need to start cutting employee hours or lay some people off. If you want to keep your employees, you may have options that can help.
If your company files for Chapter 11 bankruptcy, part of that kind of bankruptcy is restructuring your business to make it profitable again. Laying off employees may be a part of this process, but if you want to save their jobs, there may be other ways to restructure and protect their ability to stay employed through your company. For example, if you have debts related to equipment that you’ve purchased and aren’t using, you might consider selling it or returning it to eliminate the debt. Similarly, if you have a lot of money being spent on marketing that doesn’t seem to be working, adjusting that budget may help you again reach a point where you’re bringing in profits rather than sinking further into debt.
Chapter 11 bankruptcy may help you save your business
Since Chapter 11 bankruptcy is about protecting your business, you may find that there are options for reducing your business’s debt load without cutting back the number of employees you have on board.
Keep in mind that you may reach your goals sooner if you do cut back on your workforce, since salaries often make up some of the largest expenses that businesses have. You will also need to get the restructuring plan approved, so if you don’t cut back on employee hours or the total number of employees, you may find that it’s harder to get it approved without a strong plan for reducing debt.
Sometimes, letting employees go is the better choice, but it doesn’t have to be forever
Fortunately, even if you do have to lay off employees temporarily, you may be able to bring them back onboard once you settle the bankruptcy and emerge profitable. At that point, you can start to grow your business again slowly, bringing back those who have helped you build your business in the past.