Business Bankruptcy Attorneys


 

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The Dramer Law Firm has Years of Experience in Filing Corporate Bankruptcies.

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Chapter 11 Sub-Chapter V

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Business Debt Relief Attorneys

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Business Debt Relief Attorneys

Learn about your options.

See what you can save.

Contact Us Today.

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Why File Bankruptcy For Your Business?

If you are past due on your bills and are tired of the harassing phone calls, a fresh start through Bankruptcy might be the right option for you. We can help you gain peace of mind by eliminating the stress associated with your debt burden.  Our lawyers have been able to help many business owners reorganize or wipe out their obligations through the bankruptcy courts, and we can help get you and your business the relief you need.

Summary of the Types of Business Bankruptcy

The bankruptcy process works differently depending on the Chapter we file.  Generally speaking, the two most notable differences in how the different bankruptcies will work for your business is:

  1. Whether your business will CLOSE or if you can REMAIN OPEN, and
  2. Whether you’ll have to MAKE PAYMENTS towards what you owe or if NO PAYMENTS are required.

Chapter 7  BUSINESS CLOSES. NO PAYMENTS (other than payments from liquidated assets).  Although available to all types of businesses, this option is best for Corporations since Sole Proprietors have to file personal bankruptcies.  Additionally, most Partnerships and LLC’s we come across have debts that are personally guaranteed, so filing business bankruptcy may not stop creditors from coming after you personally.  Therefore, if your business debts are personally guaranteed, it may be better to avoid business bankruptcy by just closing your business instead and filing a personal bankruptcy (if you have personal assets at risk of being sold to pay off your creditors we have other relief options that could help you avoid bankruptcy altogether).  If we do file a Business Chapter 7 for you, then your business will be closed and any business assets will be sold with the proceeds being dispersed among your creditors.  If your business has no assets to sell, your debts are typically wiped out without any payment.

Chapter 11:  REMAIN OPEN.  MAKE PAYMENTS.  Available to all types of businesses (and individuals with large debt loads too), but this option is best for larger businesses, since Chapter 11 cases are very in depth and therefore usually are too costly in terms of fees and administration for smaller business owners to afford.  There are no set debt limits, revenue or income requirements, and your business can remain open and operational through a Chapter 11.  This type of bankruptcy involves a reorganization of debts and requires payments be made by the business towards it’s obligations while dealing with creditor objections.  More information on Chapter 11 is further down on the page.

Chapter 11 Sub-Chapter V:  REMAIN OPEN.  MAKE PAYMENTS.  The Small Business Reorganization Act (SBRA) went into effect on February 19, 2020.  Any type of businesses can file as long as the total debt load does not exceed $2,725,625. The new laws were put in place to help small businesses looking to reorganize their debts when filing Chapter 11 previously was too expensive.  The new laws eliminate the need for the business to become a debtor-in-possession as further described below on this page.  One of the most significant changes to bankruptcy for small businesses under the SBRA is for the ability of a reorganization plan to be confirmed by the Bankruptcy Trustee regardless of any creditor objections like in a typical Chapter 11 case where there is no trustee and the business owner is forced to deal with the creditor objections.

Chapter 13 REMAIN OPEN.  MAKE PAYMENTS.  This type of bankruptcy is only available for Sole Proprietors so that owe less than $394,725 in unsecured debt and less than $1,184,200 in secured debt.  If you are a Sole Proprietor, Chapter 13 for your business will be filing a personal bankruptcy and including your business debts.  Your business can remain open and while you make payments on your debts through the bankruptcy courts.​

 

Cost Differences of Business Bankruptcy

Type of Bankruptcy

Chapter 7:

Chapter 13:

Sub-Chapter V: 

Chapter 11:

Typical Law Firm Cost

Flat Fee $1,250 to $3,500

Flat Fee $3,000 to $5,000

Hourly $10,000 to $25,000+

Hourly $10,000 to $100,000+

Court Filing Fee

$335

$310

$1,717

$1,717

How Long Does Each Bankruptcy Take to Complete?

Type of Bankruptcy

Chapter 7:

Chapter 13:

Sub-Chapter V: 

Chapter 11:

When Do the Collection Efforts Stop:

The day we file.

The day we file, unless previously filed recently.

The day we file, unless previously filed recently.

The day we file, unless previously filed recently.

When Are Debts Discharged?

Dischargeable debts wiped out in 90 days.

Between 3-5 years.

Usually 3-5 years but no official time limits.

Usually 3-5 years but no official time limits.

Filing Bankruptcy Should Only Be Your Last Resort

 

While the relief that the automatic stay brings is a major benefit to any business owner struggling to pay their debts, bankruptcy is not a decision to be taken lightly. Most business owners, especially those used to being in control, will no longer maintain control over significant choices.   Some choices affected by the loss of control are:

  • the sale of major assets
  • signing new or breaking existing lease agreements
  • obtaining new financing
  • expanding or downsizing procedures
  • agreeing to new or altering existing contracts or agreements
  • paying fees to attorneys or other professionals.

Various studies show that approximately only 15% of Chapter 11 Bankruptcy cases succeed in completing the confirmed payments.  Typically, cases are often dismissed or end up being converted to Chapter 7 cases.  If you are thinking about filing for Chapter 11 bankruptcy, please be sure to consult with an experienced attorney to ensure you clearly understand the benefits and drawbacks as well as the risks and potential of not succeeding.  We are happy to help file a business bankruptcy for you if necessary but are also happy to offer various alternatives to help you avoid filing for bankruptcy.

Confirmation of Your Proposed Chapter 11 Bankruptcy Payment Plan

A Chapter 11 Bankruptcy usually involves an attempt to stay in business while the Bankruptcy court supervises the “reorganization” of a company’s debt obligations. As opposed Chapter 7 Bankruptcy, Chapter 11 can allow your employees to keep their jobs as your business can remain open instead of closing.  Chapter 11 grants you the right to propose a reorganization plan over a period of time.  Reorganization plans must satisfy some different criteria to be “confirmed” by the Bankruptcy court.  Confirmation is when the bankruptcy court accepts your proposed payment plan.  Many repayment plans include some amount of business downsizing in effort to lower operating costs to free up assets and cash flow.  After a certain amount of time has elapsed, creditors may also submit a reorganization plan.  For your proposed payment plan to receive confirmation it generally must pass the following tests:

Z

Feasibility

Your proposed payment plan must be feasible in that you are likely to complete the payments as you have proposed.  If it is not feasible, your case may be dismissed or converted to a Chapter 7.  There is no point in setting yourself up to fail.

Z

Good Faith

If your proposed payment plan incorporates good faith, meaning the plan aims to maximize the available amount of funds for creditor payback, it is likely to be accepted and confirmed.

Z

Best Interests of Creditors.

Your proposed payment plan needs to ensure your creditors will receive at a minimum as much through your proposed payments that they would receive if you were to file a Chapter 7 bankruptcy and have your assets liquidated.

Z

Fair and Equitable

If opposed, you must prove your plan is “fair and equitable.”  To accomplish this, you must ensure that any of your secured creditors get paid an amount at least equal to the collateral securing your obligations and that you do not keep any assets or interests unless all your creditors get paid in full.

Why use an Attorney for Your Business Bankruptcy?

Proposing a payment plan is extremely difficult to do on your own without experience and the assistance of an experienced bankruptcy attorney.  The proposed payment plan must be within reason as your creditors must vote to approve the reorganization plan. If your reorganization plan is not confirmed, the Bankruptcy court either can convert your case to a Chapter 7 liquidation, or dismiss your case granting you no relief and could cause your employees to lose their jobs.  If dismissed, your creditors wil