Chapter 11 Bankruptcy Attorney in Springfield
If you're a business owner who is struggling to pay all your debts, you may have wondered "Can a business file bankruptcy?" While individuals can obtain relief from a bankruptcy discharge of their personal debts, businesses can also benefit from filing bankruptcy. The discharge of business debts will depend on many factors, including whether the business will continue to operate after the bankruptcy is filed.
There are multiple chapters, or types of bankruptcy that may be used to provide debt relief to a struggling business. Choosing the appropriate Chapter depends on whether the owners want to continue to operate the business or close the business and liquidate the assets.
Before considering filing a bankruptcy case for a business it is important for the owners, members, or partners to determine whether they have personally guaranteed any of the business debts. A personal guarantee means that not only does the business owe the debt, but the owner is also liable for the debt.
Licata Bankruptcy Firm PC has helped hundreds of businesses in this predicament of the business owing debt that is personally guaranteed by the owner. There are different strategies utilized for a business that is a service business or a retail business. Business bankruptcy advice needs to come from an experienced bankruptcy attorney who understands the optimal action for both the owner and the business.
For distressed businesses that wish to cease operation, filing a Chapter 7 bankruptcy may be the most efficient method to liquidate any assets the business has, settle accounts owed to creditors and clear any remaining debts that are eligible for discharge.
What Is Chapter 11 Bankruptcy?
Filing Chapter 11 bankruptcy is similar to Chapter 13 bankruptcy in that payments are made to creditors instead of assets being sold to satisfy debt. However, unlike a Chapter 13, a business entity is able to file a Chapter 11 bankruptcy. Filing Chapter 11 in Springfield is the most likely bankruptcy chapter to be filed for businesses that may still be viable but need assistance restructuring their debt to make payments manageable.
In addition to a traditional Chapter 11 bankruptcy, Congress recently passed legislation meant to streamline the Chapter 11 process for simpler businesses that need a way to continue operation without the expense and oversight of filing Chapter 11 bankruptcy. This legislation, called the Small Business Reorganization Act of 2019 (SBRA), created another chapter of bankruptcy for small businesses.
Although the debt limit for SBRA cases was originally set at $2,725,625, Congress increased the debt limit as part of the CARES Act to $7,500,000. The higher debt limit is only available for small businesses that file cases within one year after the CARES Act being enacted.
Here to Help You Every Step of the Way
There are several aspects to review when it comes to determining whether it is beneficial to file a bankruptcy for the business entity and/or anyone with an ownership interest in the business that may need assistance managing their business debts. Our qualified Springfield Chapter 11 bankruptcy attorneys have a thorough knowledge of all chapters of bankruptcy and can assist you in determining the best plan of action if your business needs debt relief or business debt restructuring.