Small Business Bankruptcy Lawyer in Riverside Serving the Inland Empire and Southern California
If your small business has too much debt, it is possible for you to file for Chapter 7 bankruptcy, Chapter 13 bankruptcy, Chapter 11 bankruptcy, or Chapter 11 Subchapter V (Subchapter 5) bankruptcy. To determine what type of bankruptcy to file, you will need to first determine if you should file a personal bankruptcy or a business bankruptcy.
If you are personally liable the business debts, it may be best to file a personal bankruptcy. You are personally liable for all business debts if your business a general partnership or sole proprietorship, meaning you are doing business under a trade name. Most small business owners who file for personal bankruptcy select Chapter 7 or Chapter 13, though sometimes Chapter 11 may be the best option, particularly under the new Small Business Chapter 11 laws, also known as a Subchapter V bankruptcy.
As with any case, the options you have available for debt relief will depend on the unique circumstances involved. This includes the type of business you have, the nature of the business’ financial problems, and the goals of business owners.
Chapter 7 Business Bankruptcy Attorney in Riverside
Often the most favorable form of bankruptcy for a business owner is Chapter 7 bankruptcy where the debts are discharged without repayment over time. Chapter 7 bankruptcy may be a solution for smaller businesses, including sole proprietorships.
Typically, it means the business has no future and intends to liquidate without a plan to restructure. This may be an option for businesses with overwhelming debt loads or few assets, or when individuals operate a business simply as a small extension of their particular skillset.
Business owners may also be entirely exempt from the means test required for consumer debtors so long as their debts are not primarily consumer debts. Consult a bankruptcy attorney experienced in business bankruptcies to understand if you may qualify for a Chapter 7 bankruptcy based on the business liabilities.
Chapter 13 Business Bankruptcy Lawyer in Riverside
Chapter 13 bankruptcy, commonly referred to as reorganization bankruptcy, is a common
form of personal bankruptcy. For small businesses, it can be a solid option
for companies that wish to create repayment plans with the bankruptcy
court for paying back at least a certain percentage of debt. It may also
help business owners who have invested their personal funds in their venture.
Unfortunately, corporations and businesses that are not sole proprietorships
usually do not qualify.
Chapter 11 Small Business Bankruptcy Attorney in Riverside
No Creditors’ Committee. In the ordinary Chapter 11 cases, a committee is appointed to represent unsecured creditors. That committee can retain attorneys and other professionals at the debtor’s expense, which can increase the cost of Chapter 11 reorganization. However, in a small business case, the bankruptcy court can issue and order that prevents a creditors’ committee from being appointed.
Additional Filing and Reporting Duties. There are additional reporting requirements for small businesses not found in other Chapter 11 cases. Specifically, a small business debtor must attach the most recently prepared balance sheet, cash flow statement, statement of operations, and federal tax return to the Chapter 11 bankruptcy petition.
Plan Deadline. While ordinary Chapter 11 cases have no deadline for a plan or reorganization unless set by the court, in small business cases, however, the debtor has only 300 days to propose a Chapter 11 plan. This deadline can be extended if the debtor proves the ability to obtain approval of a plan within a reasonable period of time.
No Disclosure Statement. In ordinary Chapter 11 cases, the debtor must prepare a disclosure statement and file it with the bankruptcy court for approval, along with circulating copies to creditors and other parties. Those disclosures must provide extensive information about the debtor and proposed plan. However, the new laws allow for the bankruptcy court to waive the disclosure statement requirement in small business cases. This can reduce legal and other costs.
Contact a Business Bankruptcy Attorney in Riverside Today
When you are in dire financial straits, you need a business bankruptcy attorney who knows the law, knows the system and knows you. Talkov Law has helped individuals, families and businesses suffering from excessive debt. Call Talkov Law today at (951) 888-3300 or contact us online for a free analysis of your situation.