Chapter 11 Bankruptcy Lawyer in Longmont
Serving Boulder & the Centennial State from the Eastern Plains to Western Slope
Is your small business financially underwater? You aren’t alone. Most small businesses struggle for years before becoming profitable, even in a good economy. To beat overwhelming debt, you need support from a lawyer with an entrepreneurial background.
I created Business Bankruptcy Solutions because I understand the challenges you face as a small business owner. I have decades of experience as both a lawyer and a businessman. I put this experience to work for struggling entrepreneurs. I offer the constructive legal help you need to navigate your financial crisis, based on your unique circumstances and goals. Every case requires a tailored approach because each business owner has their own particular problems, objectives, and dreams. When you bring your case to BBS, we work together to file Chapter 11 bankruptcy, or find a suitable alternative.
Chapter 11 for Small Businesses
Chapter 11 is a reorganization bankruptcy. Instead of selling assets, you continue doing business, while paying the creditors. Chapter 11 works best for companies with a realistic chance of restoring their financial health after getting help from the bankruptcy court. It is generally used by business entities such as LLCs, partnerships, and corporations, although it can be used by sole proprietors.
In Chapter 11, you continue to operate your business under the supervision of the court. You will have a few months to get approval for a reorganization plan that shows how you will pay creditors over three to five years. To qualify, your firm must generate sufficient revenue to continue operations while paying creditors more than they would get if the business assets were simply sold.
Your reorganization plan may include downsizing, selling assets, reducing debt through negotiation or cramdowns, altering or deleting contracts, and more. The goal of Chapter 11 is to come out the other side with less debt and free from unwanted contracts and obligations. The process takes at least several months. The exact procedure varies greatly depending on the size and type of your business, the type of debts, the type of assets, and type of contracts and obligations.
The Small Business Reorganization Act of 2019
Chapter 11 is a complex and expensive procedure, which used to make it difficult for small business owners to use Chapter 11. In 2019, Congress enacted the Small Business Reorganization Act to make the process more accessible to small businesses. Now, small businesses can file under Subchapter V, which is a much more streamlined and cost-efficient version of Chapter 11.
Under Subchapter V, the business owner (not the creditors) is the only one who can propose the reorganization plan. The plan is filed within 90 days. The court appoints a trustee whose role is less adversarial, more akin to a facilitator. Additionally, Subchapter V eliminates cumbersome and expensive requirements such as disclosure statements, creditors’ committees, and the Absolute Priority Rule. To qualify, the small business must owe no more than $7,500,000* in both secured and unsecured debt, at least 50% of which was due to business activities.
*TEMPORARY CARES ACT PROVISION: To help small businesses survive the financial effects of the COVID-19 pandemic, the CARES Act increased the Subchapter V debt ceiling from $2,725,625 to $7,500,000, but only until March 2021.
He's a really sharp guy who knows his stuff.- H. Morgan Cavanaugh