June 24, 2019

Reorganizing a Business with Chapter 11 Bankruptcy

My typical Chapter 11 client is a small to mid-sized, closely held and viable business with cash flow problems. The business offers either goods or services that are in demand,but needs to be reorganized in an orderly manner instead of haphazardly responding to creditor demands.

The source of the financial problems varies; common problems include the decline of the housing market, growth and expansion at a fast pace, embezzlement by an employee, a change in ownership or leadership, or a balloon payment due to a bank that is unwilling to refinance. Some of the company’s debts may be personally guaranteed by the individual owner(s).

These clients often want to discuss filing a personal bankruptcy  in order to deal with their own debts, and also want to file a bankruptcy for their business in order to deal with the company’s debts.

Chapter 13 or Chapter 11?

Chapter 13 can be an alternative to Chapter 11 for reorganizing a small business that is a sole proprietorship or a mom and pop partnership. Chapter 13, if available for the debtor’s circumstances, can be a godsend to small companies as it is far less complicated and expensive than a Chapter 11 filing.

I designed this guide to Chapter 11 bankruptcy to help owners of small to mid-sized businesses begin the process of considering bankruptcy protection. We appreciate that it often takes time for business owners to face the process of winding down their businesses — businesses that feel like a child in some cases. Our advice is to read this guide, which will begin to prepare you for a bankruptcy counseling session.

Download my free guide to Chapter 11 bankruptcy

Making the call to a qualified bankruptcy attorney’s office is often the most difficult step in the process. Your answers await.