You’ve worked hard to grow your business, but hard times, which often are beyond your control, have led to significant debt or cash flow problems. If you are looking for solutions to your current problems, whether they are debt related or simply cash flow related, Klosinski Overstreet, LLP can help you explore your options. Contact us at 706-863-2255, and we will be happy to make you an appointment. Our office is conveniently located just off Bobby Jones Expressway and I-20.
At Klosinski Overstreet, our partners have more than 45 combined years of experience helping small businesses, whether they are Incorporated, Limited Liability Companies, or Sole Proprietorship or Partnerships, as well as individuals through the bankruptcy process. We can help you assess your situation and goals to determine whether filing for Chapter 11, or the new Subchapter 5, Chapter 7, or Chapter 13 bankruptcy is the right option for you. We know your situation is unique, and we are ready to help.
Filing for bankruptcy can provide your business with:
- Temporary protection from creditors
- Time to reestablish cash flow
- A chance to negotiate with secured creditors
- Time to liquidate assets
- Time to pay back priority tax obligations
- A chance to significantly diminish unsecured, non-priority debt
Types of Bankruptcies for Businesses
Our skilled business bankruptcy attorneys will assess your case and discuss your goals to help you determine the right path for your company. Typically, companies file for either Chapter 11 or Chapter 7 bankruptcy, depending on whether they want to reorganize and remain in operation or liquidate all their assets and shut their doors. If the business is a proprietorship, it may be possible to reorganize utilizing Chapter 13.
Here are some factors to consider when comparing the different types of business bankruptcies:
SUBCHAPTER 5 – SMALL BUSINESS DEBTOR REORGANIZATION
This is a new section of the Bankruptcy Code that just went into effect in late February 2020. One of the goals of Subchapter V is to minimize the time and expense of small business reorganization. Within 60 days of the filing, the bankruptcy court is expected to hold a status conference “to further the expeditious and economical resolution” of the case.
- Your Debt must be under $2,725,625.
- Your only asset cannot be one single piece of real estate.
- It works much like a Chapter 11, see below, but much more efficient and cost effective.
- You will need in order to file a recent balance sheet, statement of operations, cash flow statement, and federal income tax returns.
Chapter 11 (Business Reorganization)
- Chapter 11 bankruptcy temporarily stops creditor collection actions such as foreclosures, levies, lawsuits, and evictions.
- Debtors may propose alternative treatments for paying existing debt, such as altering interest rates, lengthening payment terms, and reducing principal balances.
- Debtors control the sale of assets.
- Creditors are prioritized into different classes to make a plan for realistic repayment.
- Businesses receive at least five years to pay off tax debt.
- Filings can be done on an emergency basis when needed.
- Companies re-emerge in a manageable financial situation.
Chapter 7 (Liquidation)
- Business owners may decide to file for Chapter 7 as an orderly and structured way to liquidate under the Court’s protection.
- The distributional scheme of the Bankruptcy Code may be more advantageous than would otherwise be the case.
- The Bankruptcy Code may allow for the recoveries of certain transfers that may result in a more advantageous distribution.
- Our attorneys can help you decide which entity or entities might benefit from a filing.
Chapter 13 (Personal Reorganization)
- Chapter 13 allows for a proprietorship to be reorganized.
- A principal of a business who has incurred personal debt to capitalize the business or to fund personal expenses while a business struggles can use chapter 13 to restructure personal debt.
- An individual can stop a foreclosure and catch up back payments over three to five years. Similarly, a repossessed vehicle can be returned if you are capable of catching up back payments over three to five years.
- Chapter 13 consolidates, restructures and often reduces debt into monthly payments.
- Payment plans can last three to five years.
Filing for bankruptcy may not be the best option for every business owner. Our dedicated business bankruptcy attorneys will be upfront with you about your options, including whether you should consider making out-of-court agreements with creditors. Contact our law firm today to get started.
Steps for Filing for Business Bankruptcy
Filing for business bankruptcy begins with a thorough and personal assessment of your financial situation, including the why of your situation. Our experienced attorneys will meet with you to review your income, assets, liabilities, and expenses and devise, if possible realistic goals and new strategies for your business.
In general, the steps for filing you can expect:
- Your attorney will file a bankruptcy petition with the court. This will trigger an “automatic stay,” which will protect your business from creditor action while you work through the bankruptcy process.
- Your attorney will work with you to file the required schedules outlining all of the business assets, liabilities, etc.
- You will then propose a plan of repayment to the Court.
- If you are reorganizing under Chapter 11 or Chapter 13, and your plan is confirmed, some unpaid debt may be discharged by the court.
- If a Corporation or LLC is liquidating under Chapter 7, a trustee will be appointed to liquidate assets and distribute funds. If there is personal liability for business debt, then a personal bankruptcy filing may be an option to consider as well.
If your business is in financial trouble, contact our law firm today. We can advise you on whether you should file for personal bankruptcy as well as business bankruptcy, with the goal of devising a global strategy that fits your overall financial goals.
Talk to a Knowledgeable Business Bankruptcy Attorney Today
For whatever reason you are facing a financial crisis or if just want to talk through your options, the Klosinski Overstreet Law firm is here to help. We provide you with a highly informative, low-pressure environment where you can get answers to all your questions without obligation.
When you meet with our firm, you will be talking directly with an experienced attorney, not handed off to a paralegal or assistant. We take the time to get to know your situation and understand your goals. We will want to know your dangers, opportunities and strengths. Yes, in order to get back on your feet, we need to explore opportunities with you as well as your strengths. We feel that our job is to do what’s best for you, and that includes steering you away from bankruptcy if we think there is a better alternative.
Our law firm works with small business owners and larger companies throughout the CSRA, including in Richmond, Columbia, Lincoln, McDuffie, Burke, Glascock, Jefferson, Taliaferro, Warren and Wilkes counties. Contact us now to get started.