There is no doubt about it, Covid-19 has wreaked havoc on small businesses across the country. Sole proprietors, main street businesses, suppliers, and other small businesses have had to get creative to stay open with many exploring Chapter 11 bankruptcy to reorganize as they weather the storm.
With a Chapter 11 an individual or business can propose a reorganization plan, which may include downsizing to cut costs and renegotiating debts so they can remain open. As long as the plan is feasible and fair, courts will usually agree and the process can move forward.
In the past Chapter 11 was a rather complicated process but, fortunately, the Small Business Reorganization Act of 2019 added a new Sub Chapter V to Chapter 11 making it far easier for small businesses to file.
In fact, the changes have allowed small businesses much greater flexibility in negotiating debt restructuring with creditors and imposes shorter deadlines for completing the process.
Many laud the Small Business Reorganization Act of 2019 as a win-win for small business and creditors alike. It is a powerful tool that helps small business reduce the cost and time to file a Chapter 11 while retaining a stake in the company and creditors are repaid more when compared to liquidations.
As restrictions around the pandemic continue, bankruptcy experts expect to see more Chapter 11 bankruptcies in the coming months – a bankruptcy tsunami by some accounts. If you are in a difficult financial situation, the first step is getting the information you need to determine what strategy is right for your business. Contact the Peoria bankruptcy law offices of Charles E. Covey for more information regarding Chapter 11 business bankruptcy and Chapter 7 liquidations to decide if bankruptcy is a viable solution for you at 309-674-8125.