Businesses, small and large, are being hit with unprecedented challenges due to the COVID-19 pandemic. Brands who were doing well at the beginning of the year never could have imagined the rules and restrictions that would come this year because of the pandemic. If you are struggling, a less-known option may be available.
What Is Chapter 11?
Chapter 11 bankruptcy is a process that leads to the reorganization of the business, allowing it to stay open and pay debts over a longer period of time. This type of bankruptcy gives the business the opportunity to essentially start over while reorganizing its prior debt. Previously, Chapter 11 bankruptcy has been considered one of the most complex types of bankruptcy, so some might be hesitant to pursue it.
However, it may be an option for those businesses that are having a hard time staying afloat in today’s difficult economic times.
Benefits of Filing for Chapter 11 During the Pandemic
There are a few benefits to filing for a Chapter 11 bankruptcy during the pandemic, which include:
- Businesses can continue to stay open during bankruptcy
- Businesses have longer to pay debts
- Chapter 11 tends to be faster than other types of bankruptcy
- Owners can stay in control of their business throughout bankruptcy
Filing for Chapter 11 bankruptcy can put a hold on debtor payments and allow the business owner to focus on reorganizing. It can also help business owners get through until they can reopen as normal.
Do You Qualify For a Chapter 11 Bankruptcy
More small businesses can now qualify for Chapter 11 under the CARES Act. Many changes, such as an increase in debt limits, have made Chapter 11 a possibility for businesses who might have not otherwise qualified for it. The best way to determine your eligibility is to discuss your case with a bankruptcy lawyer. When you consult with your lawyer, they will go over your financial documents and debts to determine if you are eligible for chapter 11, or another type of bankruptcy filing.
What to Expect During Chapter 11 Filing
You can expect a few things once you file for Chapter 11. This includes:
Initial meeting with lawyer: During your initial consultation, your lawyer will evaluate your current debt obligations and income statements.
- File your bankruptcy documents: If you are eligible, your lawyer will file all required documents, including balance sheets, statements of operations, cash-flow, and income tax.
- Attend bankruptcy meetings: You and your lawyer may be required to attend numerous bankruptcy meetings.
- Continue to file reports: You will need to continue filing updated reports and financial documents to support your case.
There may be other requirements, such as maintaining insurance on the business and filing and paying your taxes. Working with a bankruptcy lawyer will ensure that you know of these requirements. It is also important to note that you must be open to inspections, as the debtors will have access to financial documents, throughout the bankruptcy process.
Other Bankruptcy Filing Option
If you are struggling to get by right now, it is best to consider your financial options before you no longer have them. Reach out to an experienced bankruptcy lawyer today to better understand what other bankruptcy options may be available to you. There are multiple types of bankruptcy to accommodate business owners of all sizes.
Contact a Ringwood Bankruptcy Attorney for a Consultation About Your Bankruptcy Case in New Jersey Today
If you are struggling with debt, you may need a fresh start financially. An experienced bankruptcy and debt relief attorney can help you explore your options and determine the best course of action for you, your family, and/or your business. The experienced New Jersey bankruptcy lawyers at the Silverman & Roedel, LLC understand the nuances of New Jersey and federal bankruptcy laws, so we can help you protect your interests. Call us anytime at (973) 772-6411 or fill out the online contact form to schedule a confidential consultation. We have an office conveniently located at 1187 Main Avenue, Suite 2C, Clifton, NJ 07011.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.