Chapter 11 Small Business Bankruptcy

Gain Financial Protection with the Help of Our Houston Bankruptcy Lawyers

Although Chapter 11 bankruptcy is usually highlighted in the news when large corporations fall into financial distress, it is actually most-commonly used by small businesses without national recognition and that owe less than $2,566,050 – the Bankruptcy Code’s limit on small business debt. If your small business needs to file for bankruptcy, allow our Beaumont bankruptcy attorneys at Maida Law Firm, P.C. explain your options to you during a free case evaluation. You will find that our legal professionals are highly-experienced with all sorts of bankruptcy filings and communicate with a sense of compassion, helping you feel comfortable and confident as your bankruptcy plays out.

We would like to hear from you. Call our Beaumont office at 409.234.1490 today.

Benefits of Filing for Chapter 11 Bankruptcy

The majority of personal bankruptcies will use either Chapter 7 or Chapter 13 bankruptcies. Despite your small business being personally financed and owned by yourself and perhaps some of your close family or friends, you cannot use Chapter 7 or Chapter 13 if it is part of a larger corporation or was formed as a limited liability company (LLC). In such a situation, Chapter 11 bankruptcy may be your only option.

Chapter 11 is considered “riskier” in many regards, but it does have its benefits, such as:

  • Obligation reduction: The goal of filing for Chapter 11 is keeping your company alive through bankruptcy. Rather than dismissing all debts and shutting your doors, Chapter 11 can reduce each one to a more manageable level.
  • Payment restructuring: Similar to a Chapter 13 bankruptcy, Chapter 11 filings often restructure the terms of a loan or line of credit, allowing your small business a better chance of meeting minimum payments. Some restructuring agreements space out payments over the course of many years.
  • Downsizing: It might not seem ideal but downsizing through Chapter 11 by selling off assets can be beneficial. If your company grew too fast or was simply too large for its necessary operations, it was not profitable for you, anyway.
  • Continued operations: Perhaps most importantly, Chapter 11 will not automatically shutter your business. With a proper plan in place and a sure vision of the future, you can continue operations as normal, seek new markets, and collect profits while still addressing your debt issues.

Possible Downsides to Chapter 11

Like any bankruptcy filing, there are bound to be some downsides to Chapter 11 that you will want to consider before going through with the filing. Our goal at Maida Law Firm, P.C. is giving you the counsel and tools you need to make the right decision that puts the least amount of stress possible into your life. We can cover the potential downsides to Chapter 11 with you and help you decide if another form of bankruptcy, or no bankruptcy at all, would be better.

Some downsides associated with most small business Chapter 11 filings are:

  • Generally more expensive that Chapter 7 or Chapter 13 filings.
  • More documents and frequent reports are required.
  • United States Trustee’s Office will oversee your case.
  • Limited 300-day deadline to come up with a Chapter 11 plan.

If you are still not sure if Chapter 11 would be right for your small business, please do not hesitate to reach out to our Beaumont bankruptcy attorneys. You can contact us online to schedule a free case evaluation at no risk to you.

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