When your small business is overwhelmed by debt, the best solution in some cases could be to file for bankruptcy. Several options could be available to you, depending on the nature of the debts and assets involved, as well as the structure of your business enterprise.
Our Madison small business bankruptcy lawyers can help you make the right decision for your company and guide you through each phase of the process. Contact our experienced business bankruptcy attorneys to help safeguard your company and personal assets while preserving your interests.
When your small business is failing or cannot pay its debts, you might need to contact our Madison attorneys about filing for bankruptcy. The three primary types of bankruptcy options for small business owners are Chapter 7, Chapter 11, and Chapter 13 bankruptcies.
If you file for a Chapter 7 bankruptcy, the court will appoint a trustee to collect and liquidate your non-exempt business assets. The proceeds from the liquidation of these assets would then be distributed among the entity’s creditors in order of priority.
Sole proprietors, partnerships, or corporations can file for a Chapter 7 bankruptcy, and this may be a viable option when reorganizing the company’s debts is not a viable route. Not only can a Chapter 7 filing allow the business owner to avoid personal liability for business debts, but the use of exemptions can protect many key assets from possible liquidation.
A Chapter 11 bankruptcy filing can reorganize debts into a viable “plan of reorganization.” Business owners can maintain operations while paying back creditors over time.
A plan of reorganization must include details about how the owner will repay their obligations, subject to review and approval by a vote of the creditors, followed by the bankruptcy court. Individuals operating as sole proprietors, partnerships, joint ventures, and limited liability companies are among small businesses that can file for a Chapter 11 bankruptcy.
A Chapter 13 bankruptcy is not available to most business owners but is an option for small companies operating as sole proprietorships. As with a Chapter 11 bankruptcy, individuals must get a plan of reorganization approved by the court, which can extend over several years.
The company owner can exempt many business-related assets up to a certain monetary value and maintain non-exempt assets while paying down debts.
While the bankruptcy process will vary depending on the chapter someone files under, some key steps occur in each case. Our Madison attorneys can explain the small business bankruptcy process and help clients understand what comes next based on their situation.
A Chapter 7 bankruptcy can take four to six months. Meanwhile, Chapter 11 and Chapter 13 bankruptcy, which revolve around a plan of reorganization, can take up to several years from start to finish.
Once our attorneys help to decide on the bankruptcy chapter that makes the most sense for a business, the next step is to prepare and file the bankruptcy petition. Once the petition is filed, an automatic stay goes into effect, preventing creditors from further debt collection activities.
A vital step in the bankruptcy process is the creditors’ meeting, during which the debtor answers questions posed by the bankruptcy trustee and creditors under oath. Chapter 11 or Chapter 13 small business bankruptcies involve establishing a detailed plan of reorganization for submission and approval.
For a successful Chapter 7 bankruptcy, non-exempt assets would be liquidated, and the business would be issued a discharge allowing unsecured debts to be released. Debtors filing under any of the bankruptcy chapters will also need to comply with a credit counseling requirement.
Our Madison small business bankruptcy lawyers understand the challenges you are facing. We have helped many small business owners find debt relief through bankruptcy proceedings and can identify the most advantageous solutions to cut your losses or salvage your business.
You need a successful legal advocate when facing any type of bankruptcy proceeding. Our seasoned bankruptcy attorneys can provide personalized guidance to fit your circumstances, minimize costly mistakes, and protect you from creditors. Call us today for your free case evaluation with our paralegals and discuss the next steps.
Gillman Capone Law Group
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