Filing for a small business bankruptcy

A small business files bankruptcy under chapter 11 like a large business or corporation. In a large company under chapter 11 a creditors committee is appointed to provide oversight of the debtor. A small business may not have enough creditors to provide this type of oversight. If a business meets certain requirements, the bankruptcy code provides different procedures and rules for conducting the small business bankruptcy process.

Definitions of Small Business Bankruptcy

In order to file as a small business debtor the business must meet the following requirements:

• Debtor must be engaged in commercial or business activity (other than primarily owning or operating real property) and must have total non-contingent liquidated secured and unsecured debts of $2,190,000 or less.
• The case must be one in which the U.S. Trustee has not appointed a creditors committee or the court has determined that the creditors committee is insufficiently active and representative to provide oversight of the debtor.

• Do you need assistance with small business bankruptcy? If so, contact an experienced Bankruptcy Lawyer in your area today!

How the Small Business Debtor is treated?

The small business debtor is treated differently than the large debtor in the following ways:

• Is subject to more oversight by the U.S. trustee
• Must attend an initial interview with the trustee during which the trustee evaluates the debtor’s viability, the business plan and explains certain other debtor reports and obligations.
• Filing deadlines are different and extensions are more difficult to obtain.
• Must make ongoing filings with the court concerning its profitability, projected cash receipts, disbursements, must report its compliance with Bankruptcy Code and Federal Rules of Bankruptcy Procedure
• Must report whether it has paid its taxes and filed its tax returns

Do I need a Lawyer?

Bankruptcy filings under chapter 11 are more complex than those under Chapter 7 or 13. A fair amount of preplanning is involved with deadlines and responsibilities that can distract from the day-to-day aspect of running the business that must continue at the same time. An experienced bankruptcy attorney is necessary to be successful. However, this does not imply that to file file bankruptcy yourself would mean sure failure. If you are not sure that you need to file a chapter 11, an experienced lawyer in this area will save you time and frustration. Care should be taken to find an attorney that has experience with chapter 11 because it is significantly different from filings for individual debtors under Chapters 13 and 7. You may also need a good accountant to help with the business plans and tax filings.

• Do you need assistance with small business bankruptcy? If so, contact an experienced Bankruptcy Lawyer in your area today!