If you are an owner of a small business, you understand the incredible work, the sacrifices, and the emotional investment involved in making your business successful. It is part of your American dream-something of your own that you hope will be part of your legacy. But small businesses are risky, which leads to some taking on far more debt than they can afford to repay. While some businesses may choose to shut down and seek relief under Chapter 7 bankruptcy, some small business owners choose an alternative of Chapter 11 relief.
Chapter 11 Relief for Small Businesses
Chapter 11 bankruptcy relief is for businesses that want to continue operating, but need some debt relief to do so. It works in a similar manner as Chapter 13 proceedings, in that a small business essentially enters into a repayment plan in order to pay off its creditors. Under Chapter 11, this is referred to as a reorganization plan, in which a small business’s debt amounts and payment terms are adjusted, which gives the debtor some breathing room to continue its business operations.
Some small businesses choose not to utilize Chapter 11 because it is considered a lengthy and expensive process. However, there are certain rules that benefit small businesses within the context of Chapter 11. Specifically, if a debtor is classified as a “small business debtor”, then:
1. If the bankruptcy court approves, the debtor can submit its reorganization plan without filing a disclosure statement, which can save the debtor both time and money;
2. A small business debtor has between 180 to 300 days to exclusively propose a reorganization plan under Chapter 11;
To qualify as a small business debtor in bankruptcy court, a business must: (1) be engaged in business or commercial (but non-real estate) activities; and (2) owe no more than $2,566,050 in debt to outside creditors.
Let Us Help You Move Forward
If you are a small business owner and are struggling with debt, contact Levitt & Slafkes, P.C. We are a bankruptcy law firm with over thirty years of experience in helping individuals an businesses obtain debt relief. You have options and our attorneys will examine the state of your business, then provide you with a path forward. Let us help you. Call our office today at (973) 323-2953 to schedule a consultation, or reach us online.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years.