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We save businesses. Chapter 11 is now affordable. 

In February 2020, Congress passed the Small Business Reorganization Act (SBRA) which added a new bankruptcy code section giving small businesses a new and affordable option to file Chapter 11 cases.  The new code section is called the “Sub-Chapter 5” section of Chapter 11.

In the past, small businesses rarely considered using Chapter 11, due to the extensive legal and filing costs.  It was more cost effective to shut down and reincorporate.  However, there are many problems with that approach.  The new “Sub Chapter 5” rules streamline the process and removes key elements that led to unnecessary expensive cases.  Now, a small business with up to $7,500,000 can take advantage of this code section and consider an affordable Chapter 11.  Businesses have more options than simply close, liquidate and watch the creditors take your possessions.  It’s now affordable to save your business.

Filing for a Small Business Chapter 11 Bankruptcy

The Benefits of Reorganization (when you decide to Save the Business):

  • Continue Operating while Organizing Business Debts
  • Stop Commercial Evictions
  • Stop the Repossession of Business Equipment
  • Renegotiate Company Debts to Affordable Levels
    • Principal reductions on loans secured by equipment, vehicles and real estate
    • Negotiate a repayment plan on past due payments for loans or leases
    • Negotiate affordable payments with all taxing authorities
    • Renegotiate lease agreements
    • Renegotiate loans
    • Discharge debts
  • Emerge out of Chapter 11 as a healthier company

The Benefits of a Liquidating Chapter 11 (when you need to End the Business)

  • Prevents quick liquidations and sales
  • Gives you more time to properly market and sell your Business at a fair price
  • Get more time to sell hard to sell specialty assets of the Business
  • Minimize the impact to your personal guarantee

The Process

Workouts:  Before filing a case, it is important to seek loan settlements or a lease restructure so you can avoid bankruptcy.  Often, this process can be successful.  We can assist you in negotiating non-bankruptcy settlements with your landlord and your creditors.  It’s often very effective to have your bankruptcy attorney discuss the options to avoid bankruptcy with your creditors.

Timing:  The process to start and complete your case will depend on the complexity and on the number of objecting creditors, but many straight-forward liquidating cases can complete in 9-12 months while reorganizations can last longer.

The Cost:  Chapter 11 cases are more work than Chapter 13 and Chapter 7 cases.  Although, we charge a flat fee on Chapter 13 and 7 cases, we charge an hourly rate with Chapter 11s and ask for a retainer upfront.  The amount of the retainer will depend on the complexity of the case.  All of our legal fees are ultimately reviewed by the Judge for fairness and reasonableness before they are approved.

Just as every business and business model is unique, so is the solution to debt problems.  Our firm will analyze your unique circumstances to see if Chapter 11 is right for you. Relief starts now! Call us at (925) 278-6680 or (510) 978-4150.

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