Small businesses often struggle with finances, sometimes to the point that they must seek relief through bankruptcy. While there are three choices (Chapter 7, Chapter 13 and Chapter 11) a business owner may be able to take to find financial relief, our bankruptcy attorneys have found that Chapter 11 is the only bankruptcy option that will allow a small business to reduce debt, restructure and continue to operate if it is owned by more than one person or a corporation.
What Is Chapter 11?
We have all heard of large corporations filing for Chapter 11 bankruptcy. Every other year, some “too big to fail” company will have financial difficulties, and their decision to file for Chapter 11 bankruptcy will end up all over the news. However, most Chapter 11 bankruptcies are filed by smaller businesses than the news-makers.
Chapter 11 allows debtors filing bankruptcy in Georgia to restructure their finances by reducing debt and modifying payment terms by creating a bankruptcy court-approved plan of reorganization. By limiting the business’s obligations, Chapter 11 can help a business balance its bottom line, which will ultimately allow it to continue to operate and open up opportunities for it to gain or regain profitability.
Special Provisions for Small Businesses
Reorganizing under Chapter 11 can be an expensive and time-consuming process for a small business. Fortunately, there are special provisions written into the U.S. Bankruptcy Code that can help to reduce both the time and the money necessary to pursue Chapter 11.
If you meet the qualifications to be defined as a “small business debtor,” you can avoid a creditor’s committee, receive a longer exclusivity period, and avoid a disclosure statement. However, these special provisions do come with special restrictions as well. You will only have 300 days to file your plan proposal, you will face additional filing and reporting duties, and you will be subject to additional oversight by the U.S. Trustee’s office.
If your business is struggling and you are looking for a way to restructure without shutting down for good, Chapter 11 bankruptcy may be the perfect option for you. Call Morgan & Morgan attorneys at law today to set up a free consultation to determine whether Chapter 11 is the right solution for your company.
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