While Chapter 11 has always been an option for small businesses, it hasn’t always been a viable option.
Attorney Elizabeth Domenico discusses new rules that make Chapter 11 easier for small businesses.
Questions about Chapter 11 for Small Businesses?
Set up a free meeting with a member of our Debt Resolution Team here or when you call 303-688-0944.
I’m here with good news for small business owners during this pandemic. Previously, one of the few options in bankruptcy for small business owners was the Chapter 11 bankruptcy.
Chapter 11, No Just for Big Companies
Typically, Chapter 11 bankruptcies were designed for larger corporations to be able to restructure and reorganize their debt.
They were typically pretty time intensive and cost prohibitive to most small business owners. They ran thousands of dollars in upfront attorney’s fees, and there were a myriad of documents and financial statements that made it cumbersome and burdensome for these small business owners to try to continue running their business, as well as handle all of the nuances that the Chapter 11 bankruptcy required.
A Look at the New Rules
Congress enacted, in February, a new subchapter specifically for small business owners. It increases the amount of debta small business can have and still file Chapter 11 bankruptcy. It also dispensed with a lot of the requirements that made it burdensome and arduous for a Chapter 11 small business debtor to get through, such as financial disclosures and certain security documents.
If you are facing financial hardship as a small business owner, you should consider looking into this reorganization instead of a liquidation bankruptcy or having to shut down your business or even just trying to deal with the creditors on your own.
If you’d like more tips and tricks on these new Subchapter 5 bankruptcy procedures, join our private Facebook group.