When you are falling behind on your business payments, your livelihood may be at stake. At this point, the only way you may be able to save your business is through a bankruptcy filing. Follow along to find out how you can save your business by filing for Subchapter 5, Chapter 7, or Chapter 11 bankruptcy and how a proficient Rockland County business bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can point you in the right direction.
Can I save my business by filing for Subchapter 5 bankruptcy?
A common misconception is that small business owners receive little to no assistance when their business is undergoing a financial struggle. Rather, thanks to the Small Business Reorganization Act of 2019, Subchapter 5 bankruptcy has been added to Chapter 11 bankruptcy.
Simply put, a Subchapter 5 bankruptcy filing may be your best bet if you are a small business owner. This is because it is limited to New York small businesses that are less than $7.5 million in debt, with at least half of the pre-petition debts being from commercial business activities. In addition, it excludes owners of single-asset real estate businesses.
What’s more, a Subchapter 5 bankruptcy does not come with a requirement for an unsecured creditor committee. So, you may reorganize your business plan without a unanimous agreement by creditors. Plus, there are no quarterly trustee fees.
Should I file for Chapter 7 or Chapter 11 bankruptcy instead?
If you are not a small business owner, then you may have to turn to Chapter 7 bankruptcy or Chapter 11 bankruptcy in an attempt to save your business.
Also known as liquidation bankruptcy, a Chapter 7 business bankruptcy may have you liquidate your business to pay off as much debt as possible. This may be in your best interest to opt for if the debt of your business significantly outweighs its assets. You may also want to consider this option if you believe that your business has little to no potential of earning any future profits; has offerings of only redundant or commonplace products or services; or has extensive debts that make debt restructuring close to impossible.
Secondly, a Chapter 11 business bankruptcy may allow you to restructure your debt, all while continuing your business operations, receiving personal income, and retaining all of your current employees. Also during this time, all collection activities from vendors, banks, and creditors may be restricted. And you may even be able to keep a line of credit open. This is so long as you are capable of complying with a five-year repayment plan.
You must act fast when filing for business bankruptcy. So you should not wait too long before contacting a talented Rockland County business bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq.