At the crossroads of a tough decision, understanding your options can help. If your business has been struggling and the debts are mounting, you may be wondering if bankruptcy is your best course of action – and it may be. Every situation is different, but in some circumstances, filing for bankruptcy assistance can lead to an improved outcome. Court-supervised reorganization can sometimes save a business, helping the owner(s) regroup and move toward eventual success. In other cases, bankruptcy protection can bring freedom to pursue new, more profitable opportunities.
There’s no question, filing for bankruptcy is a difficult decision for any business owner. In most cases, there has been a tremendous personal investment, and it is natural to want to hang on to a legacy or dream. If you do decide to pursue bankruptcy, understand that you are in very good company. Many quality corporations and small business ventures have taken advantage of options that help them temporarily restructure or permanently close their doors. Whether you are the victim of a changing marketplace or simply made a costly mistake, there is no shame in seeking a lawful solution.
The Bunch & Brock law firm offers counsel and assistance for small business owners and large corporations and can help you navigate a temporary or final financial crisis. To speak to an experienced business bankruptcy attorney today, please call 859.554.0691.
Benefits of Bankruptcy
Operating a failing business can be extremely stressful, negatively affecting every aspect of your life, including your health. Depending on your individual situation, business bankruptcy protection can offer many benefits, allowing you to:
- Get out from under unmanageable debt
- Keep your doors open while you work to resolve financial problems
- Retain the property you need and get rid of assets that are not cost-effective
- Negotiate with creditors to obtain better terms
- Walk away from a painful situation
- Wipe the slate clean and start over.
Bankruptcy Options for Business Owners
The most common types of bankruptcy protection pursued by business owners include:
Chapter 11
If your business has suffered from temporary, reversible setbacks and has strong upside potential, a Chapter 11 reorganization may be the right solution. This option allows you to retain control and make key decisions that can improve your chances of success.
A Chapter 11 bankruptcy gives your business time to repay outstanding debt, allowing you to negotiate and potentially restructure terms. This is a win-win for you and your creditors, most of whom are likely to want to cooperate toward the goal of an eventual pay-out. A business that files Chapter 11 can emerge on the other side with a favorable outcome and go on to achieve profitability.
Chapter 7
If your circumstances point to continuing, inevitable losses, a Chapter 7 liquidation bankruptcy can resolve the immediate problem and allow you to start anew. For partnerships, LLCs and corporations, a Chapter 7 facilitates the sale of business assets to settle unmanageable debt.
With Chapter 7, a trustee handles the liquidation process for you, allowing you to move on and seek employment or pursue other options. Upon sale of all assets, your secured creditors are first repaid, followed by investors and other creditors, until the proceeds run out. At that time, all remaining business debt is discharged.
What Bankruptcy Won’t Do for Your Business
While a Chapter 11 bankruptcy can give you time and space to resolve problems, it is not a guarantee of future success. Many factors contribute to business distress, including some that are beyond the owner’s control. It is important to analyze the marketplace and realistically assess your business’s strengths and weaknesses before making a decision. Our attorneys can guide you in selecting the best option for your personal circumstances.
It is also important to note that a Chapter 7 bankruptcy does not erase all your debts, such as those involving personal or mixed use. If you are a personal guarantor for your business, you will be liable for remaining business debt unless you pursue personal Chapter 7 bankruptcy. As a sole proprietor, you can use Chapter 7 to eliminate both personal debts and business debt. This tool can allow you to protect your business assets and stay in business if you choose to do so.
Seek Help from a Kentucky Bankruptcy Attorney
Legal bankruptcy representation is a requirement for corporations and LLCs, and it is wise for small business owners to also retain counsel. The attorneys at Bunch & Brock are here to answer your questions and help you determine your best options today. As your legal representatives, we will work to ensure your interests are top priority. To set up an appointment, please contact us online or call 859.554.0691.
Attorney Matthew Bunch
Matt handles complicated bankruptcies and debt restructuring in Chapters 11 and 13 for both individuals and companies. He has also negotiated with multiple creditors on behalf of his clients to avoid bankruptcy. Matt is the firm’s lead litigator and handles contract disputes, certain personal injury claims and general litigation. [ attorney bio ]
