Could Bankruptcy Be The Right Answer For Your Business?
Running a business is challenging even in the best of times. When financial problems arise, you need to understand every option on the table so you can select the right solution for your business. For many business owners, bankruptcy is the best option to either liquidate the business or restructure the debt in order to keep going.
Skolnick Legal Group, P.C., can assist you in analyzing your situation to determine the best course of action for your business. Financing and debt issues arise in many ways, especially in the construction business.
Chapter 7 Vs. Chapter 11
If you decide to proceed with bankruptcy, you must decide which type of bankruptcy will best fit your needs. Most businesses choose between Chapter 7 and Chapter 11 bankruptcy. Here are a few factors to consider:
- Chapter 7 – If you cannot pay your debts, even with the help of restructuring, you may have to file Chapter 7 bankruptcy and close your business. As an incorporated business, you will have to liquidate all your business assets in order to pay as many creditors as possible. Therefore, you do not want to choose Chapter 7 if you plan to continue running your business.
- Chapter 11 – You may file a Chapter 11 bankruptcy to restructure your debts and your business in order to keep functioning. This type of filing is more expensive and complicated than Chapter 7 bankruptcy, however, so small businesses rarely choose a regular Chapter 11. Larger companies tend to find it a better option. The bankruptcy court must approve your reorganization plan for modified payment of debts and/or the sale of some assets before you conclude the bankruptcy.
- Subchapter V of Chapter 11 – Congress passed a new form of Chapter 11 bankruptcy in 2019 called the Small Business Reorganization Act. Subchapter V (often referred to as Subchapter 5) allows for a simpler, quicker and less expensive method of bankruptcy for small businesses than a typical Chapter 11. You may keep all of the equity in your business under this act and continue paying employees, allowing you to stay in business while going through bankruptcy in order to emerge financially healthy.
There are other types of bankruptcy, such as Chapter 13, but that is usually reserved only for individuals and only applies to businesses in rare circumstances, such as a sole proprietorship.
Why Choose Skolnick Legal Group, P.C.?
Business bankruptcy law is not simple. You will need a legal guide familiar with the law in order to accomplish your goals. Financial advisors and consultants can only advise you regarding restructuring your debt. They cannot provide legal advice regarding the bankruptcy court and requirements. He will explain your options through a cost/benefit analysis and advise you regarding how steps in the process, such as the automatic stay, can help your business.
Consult With Us Today
You may reach out to us online or call 212-744-9600. We have offices in Roseland and Hackensack, New Jersey, and in New York City’s midtown.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.