You may be struggling with your finances or know people who have filed bankruptcy, but bankruptcy isn’t only for individuals and couples; many businesses of all types and sizes also find themselves struggling financially and may turn to bankruptcy for relief. Oftentimes, filing bankruptcy allows businesses to continue operations while making a new financial start. Most LLCs, partnerships, and corporations benefit most from filing a Chapter 11, while sole proprietors may be better served by a Chapter 7 or 13. If an individual business owner doesn’t qualify for a Chapter 7 or 13, an 11 may work well for them. I’m familiar with all types of bankruptcy, and can help individuals and business owners make the right choices for their situation.
While a Chapter 7 will quickly discharge unsecured debts and provide you with a clean financial slate, it can result in lost property. A Chapter 11 could take anywhere from 6 months to 2 years to be resolved, but you can continue to operate your business as a “debtor in possession.” You maintain control over the day-to-day operations of your business, but the court will have a say over the major financial decisions that affect your company. Before making business decisions such as making or breaking a lease, taking out a mortgage or secured loan, expanding or closing the business, or selling any property or portions of the business, you’ll need to get approval from the court.
Getting Your Case Resolved
During the 4 months following your filing date, which is also called the “exclusivity period,” you and I will work together to create a business reorganization plan for the creditors’ committee to review. The committee consists of a group of your creditors, and they will assess your plan and offer a rebuttal with suggested changes if they disagree with any part of the plan. Everyone involved usually agrees and approves the plan, but some creditors may ask the court to dismiss your case or convert to a Chapter 7. This happens if they believe your plan is not “fair and equitable,” resulting in them not being paid at least what they would have been in a Chapter 7. Your plan must include your debts being paid before you and any shareholders receive any equity from the business. Your plan must be proposed in good faith, and it must be feasible that your company’s profits will allow you to complete the plan.
Help During a Stressful Time
Operating a business can be unpredictable, so completing a long-term Chapter 11 bankruptcy can be challenging and difficult to plan for. Still, many businesses benefit from bankruptcy and then go on to be more successful than they ever imagined. Of course, there are also situations where it may be more appropriate to scale down the business to a manageable size or even close the business altogether. I can help you make these important decisions and point you in the right direction for a financially successful and secure future.