Picking up from where Chapter 11 Bankruptcy FAQs (Pt. 1) left off, here, we will continue to respond to some common questions that people have when they’re considering Chapter 11 bankruptcy.
Q – What are the special procedures for small business Chapter 11 bankruptcy cases?
A – When a business legally qualifies as a “small business debtor” (according to the terms discussed in the first part of this blog series), the following are just a few of ways that these Chapter 11 bankruptcy cases can be fast tracked:
- No creditors’ committee will be required – Although standard Chapter 11 cases will involve the appointment of a committee to represent the interests of unsecured creditors, this obligation can be obviated in cases for small business debtors. It will be up to the court overseeing the case to make these decisions.
- The need for detailed disclosure statements can be sidestepped – Similar to the above, the bankruptcy court may also decide that a small business debtor can further expedite the Chapter 11 bankruptcy case by ruling that no disclosure statement (regarding the business’ proposed reorganization) needs to be submitted to the court for approval and circulated to the businesses creditors.
Q – Are there any drawbacks for small business owners when it comes to filing Chapter 11 bankruptcy?
A – There can be some drawbacks when it comes to filing for Chapter 11 bankruptcy, with the most notable of these being that Chapter 11 can be more expensive, more complicated and/or more time-consuming than other types of bankruptcies.
That being said, however, whether these issues arise in a particular Chapter 11 case will hinge on the specifics of that case, including (but not limited to):
- The size of the business
- The amount of debt and other liabilities the business is facing
- The nature of the creditors in the case
- The business’ intentions for organizing and whether or not the business will be planning to downsize.
In order to find out if this is the best option for your business or whether an alternative may be more efficient and less costly, it’s best to consult with Jon B. Clarke.
Q – What about Chapter 13 bankruptcy? When may it be better for businesses to file for Chapter 13 instead of Chapter 11?
A – In general, Chapter 13 bankruptcy for a business may be a better debt relief option when the business has far less debts and liabilities and still wants to remain open by reorganizing its operations (in contrast, Chapter 7 is typically a better debt relief option for businesses when the owners are ready to close the business down as the business’ debt obligations are resolved).
Again, there are more details and considerations that need to take place before coming to the decision about which type of bankruptcy is the best for a given operation. Therefore, it’s advisable that business owners (or the executives running a corporation) contact an experienced bankruptcy attorney like Jon B. Clarke for more specific info and professional guidance regarding their best options.
Stay posted for the final installment of this blog series!
Denver, Colorado Bankruptcy Lawyers at the Law Office of Jon B. Clarke, P.C.
Is your business struggling with massive debt? Or do you need help getting out from under If seemingly insurmountable debt? If so, contact the trusted Denver, Colorado debt relief and bankruptcy lawyers at the Law Office of Jon B. Clarke, P.C.
For a thorough assessment of your situation, along with expert advice regarding the best manner in which to move forward to unburden yourself from debt, call us at (866) 916-3950 or email us using the contact form on this page.