When a business encounters certain financial hardships, the best business decision moving forward may be to file for bankruptcy protection. The type of business you operate and the total debts of the business can determine the type of bankruptcy you should file. Before making any bankruptcy decisions for your business, be sure to contact Clint W. Smith, a highly qualified bankruptcy lawyer in the Gilbert area.
Chapter 11 bankruptcy is available to larger businesses and corporations in particular. A Chapter 11 bankruptcy does not call for the liquidation of the business assets, but instead requires the business to arrange for a reorganization and payment plans to pay the creditors of the company in three to five years.
When your company is in bankruptcy court, it enjoys protection from creditors. But in exchange for this protection, your company must take steps to attempt to repay its debts. After your company submits its reorganization and payment plan, your creditors have an opportunity to review the plan and vote whether it should be accepted by the bankruptcy court. Your reorganization or repayment plan must provide that your creditors be paid more or gain a greater benefit than if your assets were liquidated—this can sometimes be a high hurdle to overcome.
A Chapter 13 bankruptcy filing is similar to a Chapter 11 filing in that it is a reorganization or repayment plan. However, it can be used by sole proprietorships and partnerships. A Chapter 13 proceeding is available to businesses with secured debts of less than $807,750 and unsecured debts of less than $269,250.
Similar to personal bankruptcy, Chapter 7 calls for the liquidation of all assets of the company to pay off creditors of the company. A Chapter 7 proceeding takes considerably less time than a Chapter 11 or Chapter 13 and is available to all businesses. But at the end of the day, the company may have few if any remaining assets.
Determining which chapter of the Bankruptcy Code applies to your business is not as simple as looking at the amount of debts you have and applying a formula to determine which statutory provisions apply to your case. Bankruptcy lawyers can help you to decide which Chapter best positions your Gilbert area business for a fresh start if possible.
The law firm of Clint W. Smith, P.C. can help you. Contact our Mesa, Arizona office at 480-807-9300 or toll free at 877-290-9493. Our bankruptcy law firm serves the surrounding areas of Mesa, Chandler, Tempe, Scottsdale, and Gilbert, Arizona.
“We are considered a debt relief agency under the Bankruptcy Code. We assist people in filing for bankruptcy relief.”
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