Patrick O'Malley

Business Bankruptcies, Special Considerations

You are a business owner. Most bankruptcy information on the internet is not relevant to you. It is written for a very different audience—typically low-income individuals with crushing medical and credit card debt facing garnishment and car repossession. Business owners have totally different concerns. The following are some issues specific to small business owners contemplating bankruptcy. The business owner’s goal may be to find safe harbour to prepare their business for the economic recovery, or the goal may be to close the business down. These are very brief overviews. For detailed discussions consult the respective posts.

Chapter 11-V

Chapter 11-V buys time for struggling small and mid-size businesses. After filing, they can lower their debt, reorganize debt payments, and alter burdensome contracts. Many filers will use Chapter 11-V as a temporary safe harbour to weather the COVID-19 storm. Chapter 11-V is literally a brand-new tool that has additionally been additionally modified with special COVID-19 recovery provisions.

Refer to section: COVID-19, Chapter 11

Reducing debt

With the plummeting values of real estate and other property, many businesses owe more on their assets than the mortgage or lien. Struggling businesses can reduce their debt burdens.

Refer to section: Cramdowns and Lien Stripping

Rejecting and renegotiating contracts

Second only to eliminating debt, the vital role of bankruptcy is the filer’s ability to reject, continue, or alter ongoing contracts, including leases for real estate and equipment. Very few contracts are immune from the reach of the bankruptcy code’s long arm.

Refer to section: Rejecting and Renegotiating Contracts and Leases

Debtor in Possession Loans

Specialized lenders provide operating loans to a company while it is in bankruptcy. Here at Business Bankruptcy Solutions we have a network of vetted lenders who specialize in financing the business operations of a company in Chapter 11.

Refer to section: Chapter 11


A smooth out-of-court workout is all positives and no negatives. The problem? The vast majority of workouts are neither smooth nor practical. While in bankruptcy proceedings, a filer has enhanced leverage and so renegotiations can take on greater emphasis.

Refer to section: Bankruptcy alternatives

Paycheck Protection Program

An oft-asked question: Yes. Loans made under the PPP are dischargeable in bankruptcy, like other unsecured SBA loans.

Refer to section: COVID-19

Employees and bankruptcy

Certain labor agreements may be modified or rejected by the business filer.

Overdue payroll taxes are a priority debt and must be paid eventually, but the repayment plan is structured to stretch out these repayments to make them less onerous.

Retirement plans can be rejected or modified going forward. Money previously paid into a retirement plan typically would not be impacted by the filing.


A sole-proprietor or small business filer in Colorado may exempt up to $30,000 of ‘tools of the trade’ which include machines, vehicles, electronics, or anything else necessary to their profession. $10,000 can be exempted for a secondary side job.

Refer to section: Property that is exempt and not exempt

Contact us for help

Business Bankruptcy Solutions helps you cut your debts, renegotiate contracts and save your businesses. Call (720) 674-7311 or email now to schedule a free consultation. We will discuss the problems facing both your business and personal finances, and the tools we can use to achieve your goals. We draw upon decades of legal and business experience to provide you with actionable solutions. With BBS on board, we’ll help you weather this storm.