If your small business is dealing with unmanageable debt, you may be weighing your bankruptcy options. A Toms River small business bankruptcy lawyer can provide crucial legal guidance to help you address your company’s financial distress and explore options for recovery, restructuring, or closure.
Our business bankruptcy attorneys can conduct a thorough review of your financial situation to determine the best course of action and negotiate directly with creditors to work out manageable payment plans, debt forgiveness, and help you seek a fresh financial start. Our legal team can help protect your personal and business assets by analyzing your business structure (e.g., sole proprietorship, LLC, corporation) and personal guarantees on loans to develop a tailored debt relief strategy.
Small businesses have a few main options for filing bankruptcy. The appropriate chapter depends on the way the business is set up, the amount of debt, and whether the owner intends to continue operating the business. A small business bankruptcy lawyer from our firm in Toms River can help you make the right decision for your business and your financial future.
Chapter 11 allows a business to continue operating while it reorganizes its debts and creates a repayment plan under court supervision. This option is generally more complex and expensive than other chapters and is available to sole proprietorships, partnerships, corporations, and LLCs.
The Small Business Reorganization Act of 2019 (SBRA) created a version of Chapter 11 bankruptcy for eligible small businesses, known as Subchapter V. It was enacted to make it easier for small businesses to reorganize and rehabilitate their finances, providing a quicker and more cost-effective alternative to a traditional Chapter 11.
A Subchapter V bankruptcy simplifies the process, allows the owner to retain equity, and requires a court-appointed trustee to facilitate a plan, but the plan does not require creditor approval to be confirmed by the court. The debt limit for eligibility is periodically adjusted.
In a standard Chapter 11, the debtor (business owner) remains in possession and control of the business and works with creditors to create a reorganization plan that must be approved by both creditors and the court.
Chapter 13 is a reorganization option available only to individuals, which includes sole proprietors who are personally liable for business debts. It is not available for corporations or LLCs. The business owner develops a three- to five-year plan to repay some or all of their debts from future income.
The primary benefits include the ability to keep all business and personal assets and discharge remaining debts after the plan is completed. Debt limits apply to both secured and unsecured debts for a sole proprietor to be eligible.
Consulting with a dedicated small business bankruptcy attorney in Toms River can help you determine the best course of action for your specific business situation. Once filed, the bankruptcy court issues an automatic stay, which immediately halts creditors from making collection attempts.
Bankruptcy can provide significant debt relief, potentially lowering your payments or eliminating certain types of debt, while allowing the business to operate more efficiently. A bankruptcy filing can also provide relief from lawsuits and the associated legal fees, which can be a major source of financial instability.
Under certain types of bankruptcy, there are protections that allow a business to keep valuable assets. Importantly, bankruptcy can offer you a chance to rebuild the business on a more sustainable financial foundation.
Formal liquidation or reorganization can be a way to manage and potentially reduce certain debts that the owners have personally guaranteed. For sole proprietors, bankruptcy can help address personal financial missteps, and future employers cannot legally discriminate against an individual for having filed for bankruptcy in the past.
The bankruptcy process involves significant, complex paperwork. A Toms River small business bankruptcy lawyer can ensure that all documentation is correctly completed and filed, manage communication with the court and bankruptcy trustee, and prepare you for any necessary court appearances.
Our bankruptcy attorneys can also help determine if certain federal and state tax debts are dischargeable for a small business or if they can be restructured into a long-term repayment plan. Give us a call today to request your case evaluation.
Gillman Capone Law Group
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