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Bankruptcy is not a fun topic to discuss, but it is necessary for you to understand what it is and how it will work to the benefit of your business if you are considering filing. If you have a small business that is struggling financially, and you do not have enough resources to pay your creditors, bankruptcy may be an option for you to consider.
The most common types of bankruptcy filed by small businesses are Chapter 7, 11 and 13. Each type of bankruptcy will have a different, either positive or negative, impact on your business. Sometimes choosing Chapter 11 bankruptcy will have a significant and positive impact on your business.
Deciding when to file for bankruptcy is a harsh and troubling time. You should contact an experienced Chapter 11 bankruptcy attorney prior to filing for any type of bankruptcy to ensure it is in your best interests, and, of course, your best option.
Factors to Consider When Debating Chapter 11 for Your Small Business
Traditionally, small businesses refrain from filing for Chapter 11 bankruptcy since it is time-consuming, complex, and expensive. But it is important to note, Chapter 11 bankruptcy stands out amongst the other bankruptcy actions for partnerships, limited liability companies, and corporations, since the business can continue in operation if it is seeking to be restructured. It also grants small businesses additional time, 180 days, to file a reorganization plan and to renegotiate terms with creditors.
Chapter 11 bankruptcy permits a debtor to restructure its finances through a plan of reorganization that is subject to the bankruptcy court’s approval. The restructuring permits the debtor to reduce obligations, modify terms of payment and assists the debtor in balancing its income and expenses. This, in turn, permits the debtor to regain some form for profitability while continuing in operation. Reorganization also permits the debtor to sell assets or downsize the business, if necessary, to assist in settling outstanding debts.
What Is Considered a Small Business?
The Small Business Administration sets forth a broad definition of small businesses. Depending on the industry in which a business is engaged, whether it has 50 or 1,500 employees, it can still be considered a small business. According to the U.S. Bankruptcy Code, a “small business debtor” is a business with total debts of $2 million or less.
It is important to note that, when you file for Chapter 11 bankruptcy, the court requires that you comply with a special filing requirement. The court requires small businesses to file:
- A copy of the business entity’s most recent balance sheet
- A statement of operations
- A cash-flow statement
- A copy of the most recent federal income tax return
This requirement grants the bankruptcy court great oversight over Chapter 11 cases filed by small businesses that is not available in other types of bankruptcy proceedings.
As noted earlier, Chapter 11 bankruptcies can cost a substantial amount of legal fees and it may not be wise for struggling businesses to pursue it. In fact, Chapter 11 bankruptcies often get dismissed and converted to Chapter 7 because the business has little to no chance of turning over a profit. But, if the reorganization of the business proves to be successful, the costs of legal fees will be worth it.
Consult a Bankruptcy Attorney
In any bankruptcy situation, you should consider speaking with an experienced bankruptcy lawyer, who will evaluate your case, advise you of your liabilities, and suggest the best course of action. Call a law firm today.
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AnonymousTrustindex verifies that the original source of the review is Google.
I was facing a charge of Reckless Driving for speeding on I66 at midnight. This is considered a Class 1 Misdemeanor in the state of Virginia. Having something like Reckless Driving on your record is on par with having a DUI. This charge also carries a chance for jail time (up to a year). I was incredibly scared because I had never faced such a charge. And looking into Virginia Law, my speed exceeded 90mph, which is quite serious. I retained Dave Albo to help me with this case. Since my record was clean, Dave had advised I do the following before my trial. * Take a DMV Driver's Improvement Course * Take a Behavior Modification Course * Do 100 hours of community service * Print my DMV Record one week before the trial On the day of my trial, Dave got my Reckless Driving charge REDUCED to a regular Speeding charge. This was the absolute best case scenario for me. No criminal record. No jail time. No suspension of license. I did receive 6 demerit points and had to pay a fine of $250 (plus court fees). But that's a slap on the wrist, compared to what I could have been facing. Thank you Dave Albo for helping me through this ordeal!Posted on Google
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MDavid was incredible to work with from clear communication and next steps. To showing up to traffic court early to walk over all steps, making case in court as experienced/intelligent/well spoken lawyer. Lastly, he even followed after case in writing to confirm the outcome outlining everything that happened in lamen terms (in my case the best outcome we could ask for). I’m so appreciative to David.Posted on Google
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G RThanks to Dave Albo for a fantastic job representing me and ensuring the best possible outcome for my case. I highly recommend him - you will be in good hands for sure. From start to finish he provided expert counsel and kept me well informed. He simply could not have done a better job.Posted on Google
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