While business owners and operators have the best of intentions, often they encounter circumstances beyond their control and, despite their best efforts, their businesses face overwhelming financial challenges.
For years, the Jacksonville Chapter 11 business bankruptcy attorneys at Adam Law Group have been providing advice and counsel to local business owners. We help our clients manage their current situations while actively preparing for the future. Filing for Chapter 11 business bankruptcy can help a broad range of businesses in obtaining much needed protection from their creditors while they reorganize their operations.
If you are a business owner or manager in Jacksonville or the surrounding area and your business is experiencing financial difficulties, contact us today at (904) 329-7249. We can evaluate your situation and provide advice and counsel regarding your next steps.
Understanding Chapter 11 Bankruptcy in Florida
Personal Bankruptcy Chapter 11 versus Small Business Bankruptcy Chapter 11
Unfortunately, today’s economic environment has left many — both individuals and businesses — struggling to make ends meet. When your liabilities are greater than your assets and you do not see a brighter future, declaring bankruptcy may be your best option. In Florida and across the country, you can declare bankruptcy either as an individual or as a business.
Personal Bankruptcy Chapter 11: If you, as an individual, are struggling financially and things seem to have progressed beyond your control, you may want to consider filing for bankruptcy. A local bankruptcy attorney who handles Chapter 11 filings for individuals can help you determine the right course of action, manage the process, complete the necessary paperwork and negotiate with your creditors.
Business Bankruptcy Chapter 11: Owning and operating a business is always a challenge; there is so much to oversee. Sometimes, despite your best efforts, things spiral out of control and your business becomes unsustainable. Chapter 11 bankruptcy may be the best option for your business if you have a significant asset base and are interested in maintaining your operations.
Without a doubt, filing for bankruptcy is unfortunate. However, quite often it may be the best strategy, allowing you to refocus, reorganize and move toward a better tomorrow.
Pursuing Chapter 11 Bankruptcy for Your Business
When Businesses Are Struggling
Due to the recent economic environment, many small- and mid-sized Jacksonville businesses in varying industries and sectors have been saddled with a significant amount of debt. In many cases, the debt is unsecured or secured by collateral that has insufficient value to match it.
Further, many owners of corporations or limited liability companies could face personal liability if they cosigned or personally guaranteed the debt. Also, Florida state law provides the ability of creditors to “pierce the corporate veil” and attach business debts to business owners in situations where there were fraudulent transfers or corporate assets were improperly commingled with personal assets.
If your business is in this situation, Chapter 11 business bankruptcy may be the best strategic choice for you, your operations, your employees, and your clients.
Carrying too much debt and toxic, underwater assets can cripple a business’s ability to operate, meet financial obligations, refinance, leverage assets, or obtain necessary short- or long-term financing. Reorganizing may be the best decision for the future.
The Basics of Chapter 11 Business Bankruptcy
While working with a reputable bankruptcy attorney is critical when pursuing a Chapter 11 business bankruptcy, it is still important for you, as a business owner, to personally understand the process. After all, the process and its outcome ultimately affect your business and your future.
During a Chapter 11 Bankruptcy proceeding, the business debtor is provided with the opportunity to formulate its own plan to reorganize its debts. The plans can vary from a simple repayment plan to stock offers, contractions, or principal reductions.
Additionally, under this reorganization plan, your company may even be allowed to void some of its contracts. This option can provide considerable opportunity. You can use this power to your benefit and renegotiate contracts that may have unfavorable terms. After you have crafted a reorganization plan that you believe to be financially feasible and palatable to the creditors, it is presented for a vote.
Maintaining Control: A Benefit of Declaring Chapter 11 Business Bankruptcy
As a business owner, you likely relish the opportunity to control all aspects of your organization. One of the benefits of filing for a Chapter 11 business bankruptcy is the ability to maintain control over your operations. This benefit is not available in all bankruptcy filings.
For example in Chapter 13 bankruptcy, a trustee is appointed by the Court to oversee and control the assets of the estate. On the other hand, the business becomes a debtor in possession to serve as its own trustee in a Chapter 11 bankruptcy. The business debtor in possession is afforded the opportunity to maintain control and ownership of its own assets.
The Chapter 11 business debtor may continue its regular operations, including its routine sales and purchases that are part of its standard business operations.
Finally, a Chapter 11 business may also avoid certain payments or purchases that occurred within the 90-day to one-year period immediately prior to the filing of the bankruptcy petition. Depending upon the circumstances and specific facts of the case, payments may be returned directly to the business debtor or, in other circumstances, will simply become part of the overall reorganization plan.
FAQs About Filing Chapter 11 for Business Bankruptcy
Our Attorneys Respond to Your Concerns Regarding Chapter 11 Business Bankruptcy
Businesses that are struggling can file for Chapter 7, Chapter 13, or Chapter 11 bankruptcy. Chapter 7 is a good choice for a business without a viable future; it is also known as liquidation bankruptcy. Chapter 13, while most often used by individuals, is also appropriate for small businesses organized as a sole proprietorship. Chapter 11 bankruptcy is popular because it provides struggling businesses with the opportunity to reorganize and continue to operate. Less common forms of bankruptcy are Chapters 9, 12, and 15. Chapter 9 is appropriate for municipalities; Chapter 12 for family farmers and fisherman; and Chapter 15 for foreign creditors.
While the entire bankruptcy process is complex, the first step in all cases is to file a petition in the bankruptcy court in the location where your business resides. You should work with your bankruptcy attorney when taking this step.
Filing Chapter 11 allows you, as the business, to develop a plan (approved by the court) to restructure your business, reducing your debts so they are manageable under your income levels while maintaining operations. Under this option, you remain in control of your business; a trustee is NOT appointed by the court.
While you are likely anxious to move forward with your business and your life, filing for Chapter 11 requires patience. While some cases may conclude quickly, the timing for the completed process can range between six months and two years.
Clearly, this list of questions is not exhaustive. The process of filing for Chapter 11 business bankruptcy is incredibly complex. Those considering this option have significant concerns and questions, both general as to the process and specific, regarding their business and operations.
If your business is struggling and you believe a reorganization may provide you with the best opportunity for future success, contact our experienced Chapter 11 bankruptcy attorneys at (904) 329-7249 today.
Help for Small Businesses Seeking to File Chapter 11 in Jacksonville
How Chapter 11 May Benefit Your Business
While Chapter 11 cases for large conglomerates like Lehman Brothers and General Motors tend to steal headlines and media attention, the vast majority of Chapter 11 cases are filed by small or mid-sized businesses. These businesses provide the foundation for our community; the local population relies on their success. They employ many and provide a significant portion of the goods and services we use regularly. The Chapter 11 Bankruptcy Code contains several provisions designed specifically to assist small businesses that have become overwhelmed with debt. These provisions provide a strategic advantage to a small business debtor in a Chapter 11 case.
For purposes of Chapter 11, a “small business debtor” is defined as an individual, corporation, partnership, or limited liability entity engaged in a commercial or business activity with total secured and unsecured debt of less than $2,343,300. If this describes your organization, and you are struggling, filing for Chapter 11 may be your best course of action.
Our Adam Law Group Chapter 11 business bankruptcy attorneys can help you realize the many advantages that exist for a small business debtor to file for a plan of reorganization under a Chapter 11 Plan.
Why a Small Business Should File Bankruptcy under Chapter 11
Increased Speed of Administration.The Bankruptcy Court is required to confirm a plan for a small business debtor no later than 45 days after the plan is filed. There are some circumstances where the time period may be extended.
Conditional Approval of Disclosure Statement. In Chapter 11 cases involving large corporate debtors, the corporation is required to file a comprehensive disclosure statement and serve copies of the statement on all interested parties. The disclosure statement is voluminous, comprehensive, and extremely detailed. The process requires a great deal of information, and its preparation is time-consuming and expensive.
A small business can save considerable fees, costs and, most importantly, time by qualifying for this exemption. A small business may receive conditional approval for a disclosure statement without having to provide notice or go through a formal court hearing. In some circumstances, the court may not require a disclosure statement from a small business debtor if the Plan of Reorganization is deemed to contain adequate information.
Lack of Committee for Creditors. In Chapter 11 cases involving large corporate debtors, the rights and interests of the unsecured creditors are protected by a Creditor’s Committee, appointed by the U.S. Trustee. At the direction of the Bankruptcy Court, small business debtors can avoid the appointment of this committee. The Creditor’s Committee often hires attorneys and other professionals to aggressively pursue their claims. A small business can achieve a significant tactical advantage by avoiding the Committee.
Extra Time to Propose Reorganization Plan. In Chapter 11 cases, a small business debtor is provided with additional time with the exclusive right to file for a plan of reorganization. Large corporate debtors generally have the exclusive right to file a proposed plan of reorganization for 120 days after the case is filed. During this time, creditors are precluded from filing their own proposed plans of reorganization, which are often extremely unfavorable and harsh to the business debtors. The creditors’ plans oftentimes force business debtors to have their Chapter 11 cases converted to a Chapter 7 liquidation plan. Small businesses receive the benefit of having an additional 60-day exclusivity period to file a reorganization plan. Further, the small business debtor may seek leave of court to extend this period to 300 days.
Why Chapter 11 Bankruptcy for Business Works
Businesses decide to file Chapter 11 to reorganize and restructure their debt. Chapter 11 business debtors are bullish on the future of the company and believe that the long-term revenues will be higher than the liquidation value of the assets. Most creditors realize that they will recover more money by allowing a restructure and working out a payment plan than by fighting for scraps from liquidation. In many cases, filing for Chapter 11 business bankruptcy is a win for all of the involved parties.
Our Chapter 11 Bankruptcy Business Attorneys Can Help You
Contact The Experienced Team at Adam Law Group Today
As a business owner trying to succeed in today’s challenging environment, you may be facing significant financial constraints. At Adam Law Group, we recognize the factors impacting your operations and understand the stress that comes with managing a business.
For years we have provided legal counsel, advice, and support to struggling Jacksonville businesses. We are intimately familiar with the local business community and environment in which you operate.
If you are facing tough times, contact our experienced business bankruptcy attorneys. We have an established reputation for gaining an understanding of your business, listening to your concerns, and helping you prepare for the future. We can guide you through the Chapter 11 business bankruptcy process by managing all administrative details and representing you with both your creditors and the courts.
Contact us today at (904) 329-7249 to learn more about our practice and the value we can bring to you.