At Gillespie & Murphy, P.A., we have never seen anything quite like the coronavirus pandemic. This government enforced shutdown of non-essential businesses has caused significant financial losses for business owners – especially small business owners-and it has left people with few places to go for help. If your business is hurting, it may help you to understand a little about your options.
There are ways to prevent bankruptcy
Try to save the assets that you do have. Did you receive a stimulus check? Have you received a small business loan? There are ways to preserve those funds and use them sparingly. Allen Murphy, attorney and firm partner, believes that the right solution may simply take some time. Learn more by reaching out to a lawyer or otherwise qualified professional who understands how bankruptcy can affect your business.
Bankruptcy options and what to know about them
There are different types of bankruptcy you may choose from as a small business owner with significant debts. Note, however, that some options may be better for your business than others.
- Chapter 7 bankruptcy: This is known as a liquidation bankruptcy. All the assets related to your business will be sold and the profits distributed to creditors.
- Chapter 11 bankruptcy: Chapter 11 is also known as reorganization bankruptcy. Unlike chapter 7, chapter 11 bankruptcy involves business owners retaining their property. Reorganization involves drafting a plan for credit payments.
- Chapter 13 bankruptcy: In a chapter 13 bankruptcy, debtors may propose a three-to-five-year repayment plan. Like chapter 11 bankruptcy, you may hold onto your assets. The court must confirm that your plan complies with Bankruptcy Code standards.
The bankruptcy for which you file will depend on the circumstances surrounding your business. Everything from the amount of debt to the value of your current assets need to go into consideration before filing.