Business Bankruptcy & Reorganization
Businesses can get themselves into a host of financial difficulties. One of the most common today is impact of the Covid 19 pandemic. Many more mundane problems however can create circumstances which threaten the viability of a business enterprise.
Understanding Business Bankruptcy & Reorganization
Chapter 11
One of the main purposes of Chapter 11 is to provide relief and the ability for a creative reorganization professional to stop the bleeding and reorganize the business financial affairs.
Many small businesses can choose between small business Chapter 11 and Subchapter V.
Different rules and opportunities apply for small business bankruptcy, Subchapter V, individual Chapter 11’s and single-asset real estate cases.
Subchapter V, a relatively recent addition to the Bankruptcy Code, provides a number of unique opportunities for a small business reorganization, particularly including protection of the principal’s equity in the company. Subchapter V cases move quickly and will require an experienced bankruptcy professional who is prepared from the outset.
Debt limits are the main qualification for Subchapter V.
Subchapter V
Chapter 12
Family farmers and commercial fishing operations, including aquaculture operations, whose aggregate debt total comes under a maximum of $4,153,150 set by the Bankruptcy Code, may qualify for Chapter 12.
The debt limit is subject to change on April 1, 2022, and every three years thereafter.
The opportunities in Chapter 12 reorganization can be particularly beneficial compared to other Chapters of the Bankruptcy Code.