Can Bankruptcy Help If My Business Is Struggling?
Reaching the realization that your business is struggling can be difficult. You may be unsure about whether the business will be able to earn enough in profits over the coming months to pay debts, and you might be wondering if it is time to close your business. When businesses in South Florida go through temporary setbacks from which they plan to recover — but which can result in debts building up — a reorganization bankruptcy is often a very powerful tool that can allow a business to get caught up with creditors while remaining open and running the business. At the same time, a Chapter 7 liquidation bankruptcy can be helpful to businesses that do not see a financial path forward and need to be able to close the business and to repay creditors as fully as possible.
To be clear, if your business is struggling, bankruptcy could be able to help. It is important to discuss the particular facts of your case and your business’s financial circumstances and history with a West Palm Beach bankruptcy lawyer. In the meantime, we can tell you more about how bankruptcy can benefit struggling businesses.
Reorganization Bankruptcies Give Businesses a Way of Catching Up with Creditors and Remaining Open and Operational
Reorganization bankruptcies are extremely useful for businesses that have experienced temporary or seasonal setbacks and need a path forward for their business while restructuring debt. Business bankruptcies often include Chapter 11 and Subchapter V (a subchapter of Chapter 11 designed for small businesses specifically). When a business is a sole proprietorship, it may be possible to file Chapter 13 bankruptcy. In these reorganization bankruptcies, the business creates a repayment plan to catch up on debt with creditors and remains operational.
Liquidation Bankruptcies Allow Business to Repay Creditors As Much As Possible and to Close the Doors
Unlike a reorganization bankruptcy — whether it is a traditional Chapter 11 case, a Subchapter V case, or a Chapter 13 case for a sole proprietor — a Chapter 7 bankruptcy does not allow a business to remain open. In Chapter 7 business bankruptcies, just like in Chapter 7 cases filed by individuals, assets are liquidated in order to repay creditors. There are a number of differences between Chapter 7 bankruptcies for businesses and individuals, most notably the bankruptcy discharge. At the end of an individual bankruptcy, the debtor receives a discharge and gets a fresh start financially. This is not what happens for a business. A business does not receive a discharge and does not get a “fresh start” in the same way as a consumer. Instead, the business closes, and there is no longer a legal entity for creditors to pursue, thus the reason that there is no need for a discharge.
A liquidation bankruptcy can help your business if you know you will likely need to close the doors of the business and you have significant outstanding debts.
Contact Our Bankruptcy Attorneys in West Palm Beach
Any business owner who has questions about bankruptcy should get in touch with an experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan & Eller to find out more about the benefits of a business bankruptcy and how different types of bankruptcies would impact your business. Do not hesitate to contact us to discuss the financial circumstances of your business and to learn more about eligibility for different forms of business bankruptcy in South Florida.