When you first start your business, your biggest fear is likely going into debt. So when you begin to notice that your business is not generating enough profit to support itself, this can be a panicked situation. However, you can rest assured knowing that there are different bankruptcy options at your disposal. Namely, there is Chapter 7, Subchapter 5, and Chapter 11 business bankruptcy. Continue reading to decipher between the different types and how an experienced Rockland County business bankruptcy attorney at the Law Offices of Allen A. Kolber, Esq., P.C., can help you determine which is best for your financial situation.
What is Chapter 7 business bankruptcy?
When filing for Chapter 7 business bankruptcy, you will essentially be liquidating your business so as to pay off as much debt as possible. You may choose this bankruptcy option if the following statements apply to your business’s financial status:
- Your business debt is greater than the assets it holds.
- Your business debt is too extensive for debt restructuring.
- Your business has little to no potential for future profit.
- Your business only offers a commonplace product or service.
What is Subchapter 5 business bankruptcy?
If your business is considered a small business, then perhaps filing for Subchapter 5 business bankruptcy is your best move. Congress enacted the Small Business Recognition Act in 2019, and part of this meant that small businesses with less than $7.5 million in debt, and with at least half of these pre-petition debts from commercial business activities, now have a bankruptcy option. Some of the benefits you will be allotted read as follows:
- There is no unsecured creditor committee necessary.
- There is no absolute priority rule applied (i.e., you can reorganize your business plan even without unanimous agreement by creditors).
- There are no quarterly trustee fees applied.
What is Chapter 11 bankruptcy?
If you wish for your business to continue operating, receiving income, and retaining employees, you may want to opt for Chapter 11 bankruptcy. With this, all you have to do is create a five-year repayment plan so that your business can be a profitable entity once more.
An additional benefit to Chapter 11 bankruptcy is that vendors, banks, creditors, etc. will be restricted from coming after you for any collection activities. What’s more, is that you will still be allowed access to a line of credit.
If you are still unsure about which bankruptcy option is in your best interest, we can step in to help. As soon as you possibly can, pick up the phone and call a skilled Rockland County bankruptcy attorney today.
Contact our experienced New York firm
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.