How Can My Business File for Bankruptcy and Remain Operational?
When your business is struggling with debt, but you and the other owners do not want to have to close the business, can bankruptcy be an option? In short, the answer is yes. When business owners learn about reorganization bankruptcies, they can be surprised to learn that it is possible for a business to file for bankruptcy while remaining operational. You have likely encountered businesses, and shopped in them or paid for goods or services from them, that are going through a Chapter 11 bankruptcy or another type of reorganization bankruptcy. What do you need to know about a reorganization bankruptcy for your business? Our West Palm Beach bankruptcy attorneys can give you additional information, and we can speak with you today about your business’s situation.
Understanding Reorganization Bankruptcy
There are different types of bankruptcy, including personal bankruptcy and business bankruptcy, as well as liquidation bankruptcy and reorganization bankruptcy. When a business wants to remain operational while going through a bankruptcy process to restructure debt, it can file for a type of reorganization bankruptcy that is available to businesses. In a reorganization bankruptcy, the business develops a plan to restructure debt and makes payments to creditors over a period of time. The aim of a reorganization bankruptcy is for a business to catch up on debts it owes while developing new funding or revenue sources in order to stay operational once the bankruptcy case is completed. With a reorganization bankruptcy, a business can continue serving customers and clients as usual as it makes payments on its plan of reorganization.
When a business simply is not earning enough to pay debts, even after a reorganization bankruptcy, it will typically file for Chapter 7 bankruptcy, which is a type of liquidation bankruptcy that does require the business to close.
Types of Reorganization Bankruptcies for Businesses
The type of reorganization bankruptcy that is best for your business, and for which your business is eligible, will depend on the structure and nature of your business. Generally speaking, the following are some of the common forms of reorganization bankruptcy that may be filed by businesses:
- Chapter 11 bankruptcy, which is most commonly filed by businesses and is, in general, the most complex of the forms of reorganization bankruptcy available to businesses (but often, especially for larger businesses, it is the only type of reorganization bankruptcy for which the business is eligible);
- Subchapter V bankruptcy, which is a subchapter of Chapter 11 and is a more streamlined and simplified form of a Chapter 11 reorganization bankruptcy for small businesses with a limited amount of debt;
- Chapter 13 bankruptcy, which is a reorganization bankruptcy for consumers, but businesses that are structured as sole proprietorships may be able to file for Chapter 13 (since individual business owners and sole proprietorships are not different entities for bankruptcy purposes, a bankruptcy for a sole proprietorship is also a personal bankruptcy, and vice versa); and
- Chapter 12 bankruptcy, which is a type of reorganization bankruptcy for family farmers or fishermen.
Contact a West Palm Beach Bankruptcy Attorney
Is your business considering bankruptcy, but you know you want to keep the company operational? Chapter 11 bankruptcy, Subchapter V bankruptcy, or another type of reorganization bankruptcy suitable for businesses can allow your business to reorganize debts while keeping the doors open. Do not hesitate to contact one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Kaplan & Eller to find out more about how we can assist you. We have years of experience helping businesses of all sizes in South Florida with bankruptcy proceedings.