Small Business Bankruptcy in Atlanta
If your business is in financial trouble, filing a Chapter 11 bankruptcy may be the appropriate course of action to help reorganize your finances. Chapter 11 is a totally different animal than consumer bankruptcy cases. Chapter 11 is typically used to reorganize a business, which may be, among other things, a corporation, sole proprietorship, limited liability company, or partnership. If your small business is having significant financial troubles, you will need the help of an experienced Chapter 11 bankruptcy attorney to help you through this complex process.
Should My Business File Chapter 11?
Answering this question requires the management to actually know what caused the financial strain in the first place. One thing that is vital to any successful Chapter 11 Plan of Reorganization is cash flow. Without cash flow, no business can survive, even in bankruptcy. Here are the things that a Chapter 11 Plan can do for your business:
1. Immediately stop any creditor collection efforts, including any pending litigation against your company, which can either be continued in the bankruptcy court, or resumed at a later date in its original venue.
2. Prevent utility companies from pulling the plug (pun intended).
3. Stop any real property and equipment foreclosure actions.
4. Allow the business to pay back its outstanding debts (including tax debts) over a period of years. Unsecured creditors are often paid pennies on the dollar pursuant to the provisions of a confirmed plan.
Here are the things that a Chapter 11 Plan cannot do for your business:
1. Create a marketable product or service.
2. Increase revenue.
3. Give management the skills and drive necessary to operate a successful business and operate it through the extensive Chapter 11 process.
The Chapter 11 Plan
Business owners are given the opportunity to propose a plan of reorganization to restructure their outstanding debts. The Plan essentially allows small businesses to repay their debts overtime, including both secured and unsecured debts. Unsecured debts (trade creditors, lines of credit, etc.) are often paid back pennies on the dollar, and secured creditors’ claims can often be “crammed-down” to the value of the collateral, resulting in significantly lowered payments.
For instance, if you were in the business of providing roll-off container services to various businesses in the Atlanta area, you would likely have financed the purchase of the roll-off containers through a local bank. If the loan balance had increased to $600,000 from the accumulation of fees and unpaid interest, but the roll-off containers were currently worth only $300,000, I would put a provision in the Chapter 11 Plan to lower the balance to $300,000, extend the maturity date a few years, and lower the interest rate to acceptable levels. This would result in a monthly payment less than half your original amount and give your business the breathing room it needs to thrive and remain profitable.
HOW TO GET STARTED
If you think a small business bankruptcy may be in your future, call me at (678) 587-8740 or send me an email at email@example.com to discuss your case.