Is My Business at Risk of an Involuntary Bankruptcy?

Is your South Florida business going through a significant financial downturn? If your business’s financial difficulties have resulted in delinquencies or default on payments with creditors, you may be concerned about the potential actions that your creditors or debt collectors could take against you or your business, depending on the structure of the business and the specific details of the debt. In some circumstances, although as we will explain, it is relatively rare, something that creditors may be able to do is to initiate an involuntary bankruptcy case for your business.

What is an involuntary bankruptcy, and is this something that your business is currently at risk of, given the debts it owes? Our South Florida business bankruptcy lawyers can provide you with more information about involuntary bankruptcies, how they can be initiated, and what you may be able to do in order to avoid one. Consider the following information.

What is an Involuntary Bankruptcy?

Before we discuss whether your business could be at risk of an involuntary bankruptcy, it is important to understand what is involved in an involuntary bankruptcy.

Under the United States Bankruptcy Code, this is a bankruptcy that can be filed by creditors, requiring a debtor to go through bankruptcy so that they can recover money they are owed. An involuntary bankruptcy can be initiated against an individual or a business, and for a business, it can be initiated under Chapter 7 or Chapter 11.

Is Your Business at Risk of Involuntary Bankruptcy?

You should know that, although involuntary bankruptcy is permitted in certain circumstances, these are very rare and most businesses will never be subject to an involuntary bankruptcy. There are three general requirements that must be met in order for an involuntary bankruptcy to occur:

• At least three petitioning creditors (unless the debtor has fewer than 12 creditors);
• Each petitioning creditor has a claim against the debtor that meets specific requirements; and
• Claims total a certain amount more than the total value of the liens on the debtor’s current property.

To determine if your creditors can actually move forward with an involuntary bankruptcy, you should seek legal advice. If it may be a possibility, or if you simply want to address your business’s financial issues and restructure debt, your lawyer can begin working with you on a voluntary Chapter 11 or Subchapter V filing.

Contact Our West Palm Beach Bankruptcy Attorneys Today for Assistance with Your Florida Corporate Bankruptcy Concerns and Questions 

Are you concerned about involuntary bankruptcy? As we explained, involuntary bankruptcies can occur, but they are relatively rare. As such, unless there is a specific reason or circumstance that has you concerned about an involuntary bankruptcy for your business, it may not be an issue that is likely to come to pass. However, if you do have questions about an involuntary bankruptcy that may occur or that has already been initiated, or if you want to find out more about filing for a voluntary reorganization bankruptcy for your business before an involuntary bankruptcy case occur, an experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan Delaney & Eller, PLLC can assist you. Contact our firm today to learn more about the corporate bankruptcy services we provide to businesses in South Florida.

Source:

uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section303&num=0&edition=prelim