Ways Bankruptcy Can Protect Small Businesses in South Florida
Many business owners avoid the topic of bankruptcy when their business is struggling because they fear that a bankruptcy filing will mean the end of the business. This is a common misconception, however, and it is only applicable to business liquidation bankruptcies. Reorganization bankruptcies, much differently, are able to protect small businesses and their assets. In addition, reorganization bankruptcies can also give small businesses a stronger footing for navigating business financial matters in the future.
What are some of the key ways that reorganization bankruptcy under Chapter 11, Subchapter V, Chapter 12, or Chapter 13 (the latter only for sole proprietorships) can protect small businesses in South Florida? Our West Palm Beach bankruptcy lawyers can give you general information, and we can discuss the specifics of your business and your bankruptcy plans with you today.
Automatic Stay Stops Existing Collection Actions
One of the major protections of a bankruptcy filing for small businesses is the protection of the automatic stay. As soon as your business files for bankruptcy, a type of injunction known as the automatic stay will immediately take effect. The automatic stay stops creditors or debt collectors from continuing any existing collection actions against you or initiating new collection actions (including lawsuits) while your business is going through bankruptcy. During the course of a reorganization bankruptcy, your business can catch up on debts with those creditors so that there is no need for collection actions in the future.
Catch Up on Past Due Debt
Another of the protections for small businesses that file for bankruptcy is that they can catch up on debt that is past due with their creditors while keeping their business open and fully operational. The nature of a reorganization bankruptcy, and its required repayment plan, allows business debtors to repay certain creditors in full and to have certain other debts discharged. All of this can happen while the business remains open, and catching up with certain creditors can create a stronger relationship between the business and the creditor for the future of the company.
Obtain New Financing
Businesses that file for reorganization bankruptcy can often be eligible to obtain debtor-in-possession financing, which they would not have been able to get without the bankruptcy filing. This type of financing can help your business as it makes restructuring plans for the future.
Contact Our West Palm Beach Bankruptcy Attorneys for Assistance with Your Case
Reorganization bankruptcies can benefit small businesses in various ways, as we have discussed above. There are many misconceptions and misunderstandings about business bankruptcy, and it is a common myth that you will need to close your business if you file for bankruptcy. In actuality, a reorganization bankruptcy filing can help your business to get back on track financially, and in many circumstances to become more financially stable going forward. An experienced West Palm Beach bankruptcy attorney at Kelley, Fulton, Kaplan & Eller can discuss your business bankruptcy options with you today. Contact our firm to learn more about how we assist small businesses in South Florida with different types of reorganization bankruptcies.
Source:
law.cornell.edu/uscode/text/11
