Chapter 11 – Bankruptcy for Small Businesses
Small businesses who are struggling now have an accessible, affordable option for filing bankruptcy. Effective February 2020, a provision in the bankruptcy code was added to specifically make the reorganization process easier and more affordable to small businesses under Chapter 11 of the Bankruptcy Code.
If you are a small business owner, and are struggling to pay your expenses, employees, or both, Chapter 11 bankruptcy can give you the time and breathing room you need to reorganize your income and expenses, while continuing to operate and manage your business.Understanding Small Business Chapter 11 Bankruptcy
To take advantage of the benefits Chapter 11 bankruptcy offers a small business, the small business must meet the following requirements:
- Have debts that total less than $2,725,625.00;
- More than 50% of the debt of the small business must arise from the normal business activities of the small business
- Have recent financial statements and tax returns for the business to provide to the Court, or have a valid reason why those documents have not been prepared;
- Have senior personnel (the owner if possible) available to attend meetings and hearings in Court.
- Have cashflow available for the business to be able to pay some expenses and reorganize.
Small Business Chapter 11 bankruptcy allows a small business owner to keep the business open and continue to manage the business while the bankruptcy is ongoing. The bankruptcy allows the small business to pay debts at different times, regardless of the normal due date of the debt, and pay less on some debts than what's owed on that debt.
Small business bankruptcy also provides protection from the creditors of the small business, which means that the people and companies the small business owes money to cannot harass the small business or take any action against the business to collect the debt while the bankruptcy is pending.Can Small Business Bankruptcy Help Me with My Personal Debts?
Most small business owners personally guarantee business debt. If much of your business debt is personally guaranteed and/or shows up on your personal credit report, you may benefit from a personal bankruptcy, such as Chapter 7 or Chapter 13 bankruptcy. Filing business bankruptcy and a personal bankruptcy at the same time may give you the debt relief you need.How Much Does Small Business Chapter 11 Cost?
There is no set fee for a Small Business Chapter 11 Case, and the fee depends on the facts of each case. At Powell Law Offices, we offer free consultations, and will quote you the fee after we've had the opportunity to gather the information we need from you during the consultation to quote you a fair fee.Benefits of Chapter 11
Chapter 11 bankruptcy has many benefits. The biggest benefit is that you will eliminate the business's excessive debts and be able to continue to keep the business open. Once you have completed Chapter 11 bankruptcy, you will no longer have your debt hanging over your head, but will instead have peace of mind and the ability to afford to continue to keep the business open.Hire a Bankruptcy Lawyer for The Help You Need
Powell Law Offices, P.C., understands the intricacies of bankruptcy and can answer any questions you have. Lauren Powell is Nationally Board Certified in Bankruptcy Law and works one on one with clients, which means you will have direct access to your lawyer at all times instead of having to go through a secretary or paralegal. We are proud of our client commitment and will keep you informed and confident. We also offer a free bankruptcy case evaluation for each client, so schedule your consultation right away. The sooner you hire a lawyer, the sooner you can find relief from your overwhelming debts. Contact us today!