If you own a small business you know that there are many considerations and challenges to keeping your business afloat and your revenue flowing into your company. In addition to the necessity to keep the revenue flowing, the small business owner must do their best to keep keep both their fixed and variable costs low. Bankruptcy is one invaluable tool for the small business owner to help lower high costs by either letting them end their contracts without any threat of legal damages, or, at the very least a specific formula to determine with certainty what those costs will be. At the same time the small business owner may also re-negotiate with existing creditors to help lower their overhead costs.
A Bankruptcy Court sitting in a Chapter 11 case has very broad powers to allow a Chapter 11 business debtor to re-negotiate with utility companies, supply contractors and unions or other labor representatives as well many, many other individuals or entities. Chapter 11 business cases are for the business owner who wants to keep their business going and has a realistic chance to do so if certain costs are renegotiated and other legal objections are met. It is important to note, however, that Chapter 11 cases are complicated and require a heightened level of attention. It is critical that before filing for relief under Chapter 11 of the Bankruptcy Code you have a detailed discussion with your experienced bankruptcy attorney regarding your current state of affairs as well as your realistic goals for your small business in the near, intermediate and long term future. These discussions will inform your attorney as to whether it is better to negotiate a pre-packaged Chapter 11 case and then file or whether it is better to file for relief under Chapter 11 and file for various protective Order on the first day at the inception of your case.
Yes, Chapter 13 has a place in small business bankruptcy discussions. If you are your businesses only employee and there are numerous guarantees that you signed incurring liability in your personal capacity as well as your capacity as the owner of your small business, perhaps even using personal property or your home as collateral, you may need to file for Chapter 13 bankruptcy. To be sure, you cannot file for bankruptcy under Chapter 13 of the Bankruptcy Code in your capacity as the owner of your small business. If you file for relief under Chapter 13 of the bankruptcy you must be an individual.
Chapter seven of the Bankruptcy Code allows for a business to file for relief under Chapter seven to liquidate their business. If your business does not have significant name or brand recognition and if there is little in the way of actual assets that the business owns, such as tools, a fleet of cars, many computers, et cetera, it may be worth your while to liquidate the company and officially unwind your business with the state. If you work as an educated professional your value lay in your education and experience. Plumbers, welders, electricians and all manner of skill craftsman as well as lawyers, accountants and architects certainly fall within the ambit of this discussion. You can alway reopen a new business doing the same thing whenever you need to as there is no prohibition against doing so.
The law firm of Long & Long, P.C. have decades of combined experience in bankruptcy and has the know how to represent any type of client, whether debtor or creditor, in any type of bankruptcy proceeding, including Chapter 11 and Chapter 7. Long & Long, P.C. can be reached at (303) 500-3426.