In a challenging economy, Bankruptcy offers various solutions to help individuals and businesses regain their financial footing. As stated by the American Bankruptcy Institute in their June 2024 findings, commercial filings?are at a 28 percent increase in June 2024 compared to June 2023. To help you determine whether bankruptcy can help you or your business get back on your feet, Business Law Group has provided an overview of the different types of bankruptcy, with a special focus on Chapter 11 Subchapter 5 ? the specific bankruptcy solution we specialize in.
Types of Bankruptcy
Chapter 7 Bankruptcy: Liquidation
Chapter 7 bankruptcy, also known as “liquidation” bankruptcy, involves the sale of a debtor’s assets to pay off creditors. Often regarded as the quickest and most cost effective, this type of bankruptcy can be filed by either individuals or businesses, but often the business is forced to close or is already closed. It’s designed for individuals and businesses facing insurmountable debt that they will likely never be able to repay. Upon the successful completion of the process, most remaining debts are discharged, offering a fresh financial start.?
Chapter 13 Bankruptcy: Repayment Plan
Chapter 13 bankruptcy is known as the ?repayment plan? and allows individuals with regular income to develop a plan to repay all or part of their debts over three to five years, depending on their individual situation and circumstances. This type of bankruptcy allows debtors to keep their property while catching up on missed payments. While this type of bankruptcy is exclusive to individuals, the reorganization of personal debts can be used as a tactic to allow the debtor?s business to remain open.?
Chapter 11 Bankruptcy: Reorganization
Chapter 11 bankruptcy is typically used by businesses to reorganize their debts and continue operations while repaying creditors over time. This type of bankruptcy has spiked in the last year (June 2023 – June 2024), with a 70% increase in filings. This type of bankruptcy is complex and can be costly, making it suitable for larger, more established corporations and business entities. This type of bankruptcy is exclusive to businesses ? individuals cannot file under this plan.
Our Specialty- Subchapter 5: Streamlined Reorganization for Small Businesses
At Business Law Group, we exclusively specialize in Chapter 11 Subchapter 5 bankruptcy. Chapter 11 Subchapter 5, introduced by the Small Business Reorganization Act of 2019, is a streamlined version of traditional Chapter 11 bankruptcy. This option is tailored for small businesses with debts under a certain threshold, providing a more straightforward and cost-effective path to reorganization. Here?s why Subchapter 5 might be the right choice for your business:
Benefits of Chapter 11 Subchapter 5
- Simplified Process: Subchapter 5 eliminates some of the more burdensome aspects of traditional Chapter 11, making the process faster and less expensive.
- Debtor in Possession: Business owners retain control of their operations while working through the bankruptcy process.
- No Creditors’ Committee: Unlike traditional Chapter 11, Subchapter 5 typically does not require the formation of a creditors’ committee, reducing complexity and costs.
- Streamlined Plan Confirmation: The process for confirming a reorganization plan is simplified, often allowing for quicker resolution and implementation.
- Focus on Viability: The goal is to ensure the business’s long-term viability, allowing it to emerge stronger and more competitive.
Business Law Group is dedicated solely to Chapter 11 Subchapter 5 bankruptcies, bringing in-depth knowledge and specialized skills to each case. We understand that every business is unique, which is why we tailor our strategies to meet the specific needs and goals of your business. Our mission is to guide you through the bankruptcy process efficiently, helping you achieve a successful reorganization and a brighter financial future. Call today to schedule a free consultation to determine whether Chapter 11 Bankruptcy may benefit you and your business.?
