Answers to Common Business Bankruptcy Questions
When businesses struggle financially, many business owners consider the possibility of bankruptcy. Given that there is often significant news coverage about store closures and company bankruptcies in Florida and throughout the country, and since there are so many different types of business bankruptcy, it can be difficult to know what information is applicable to your company’s situation. We know that business owners have a wide range of questions about business bankruptcy when they are considering the possibility, and our firm is here to assist you. The following are some answers to commonly asked questions about business bankruptcy.
Businesses Often Do Not Need to Close After Filing for Bankruptcy
You might be wondering: will filing for bankruptcy mean that my business must close? It is a common myth that businesses filing for bankruptcy will always need to close down, either temporarily or permanently. In fact, with any type of reorganization bankruptcy, a business can continue operating (and keep its doors open) while repaying creditors and getting the business solvent again. Reorganization bankruptcies include Chapter 11 (and Subchapter V), Chapter 12, and Chapter 13 when the business is a sole proprietorship. The only type of bankruptcy for businesses that requires a company closure is Chapter 7, which is a type of liquidation bankruptcy.
Subchapter V Eligibility is Based on Specific Factors
If you are considering a reorganization bankruptcy, you are likely wanting to know: does my business qualify for a Subchapter V bankruptcy? Subchapter V bankruptcy is relatively new, and it makes the bankruptcy process quicker, more streamlined, and less expensive for small business debtors. The key requirements are that the debtor not exceed the debt limit of $7.5 million, that the debtor is involved in commercial or business activity, and that at least 50 percent of the debts arose from business or commercial activity.
Business Bankruptcies Do Not Usually Impact Individual Business Owners’ Finances
Anyone running a small business likely has the question: will a business bankruptcy affect my personal finances? In general, business bankruptcies are separate from the individual business owners, and thus business bankruptcies do not usually impact the finances of individual owners or members. However, when the business is structured as a sole proprietorship, business and personal debts and assets are not separate. Accordingly, in those circumstances, both the individual and business finances will be part of the bankruptcy case.
Contact a West Palm Beach Bankruptcy Attorneys
Businesses that are struggling financially have many questions and concerns about the bankruptcy process. Regardless of whether you are thinking about a reorganization bankruptcy and remaining open or a liquidation bankruptcy that will involve closing your company, an experienced West Palm Beach bankruptcy attorney at Kelley, Kaplan & Eller can speak with you today about your situation and your options for moving forward. We regularly assist businesses with Chapter 11, Subchapter V, Chapter 7, and other forms of business bankruptcy. Do not hesitate to get in touch with us to ask any questions you have or to learn more about how our firm can help your business.