Chapter 11 Bankruptcy

Atlanta Chapter 11 Bankruptcy Lawyers

Chapter 7 and Chapter 13 are the most common types of bankruptcy filed by consumers in the United States. Chapter 11, however, can be an effective debt-relief strategy for businesses of all sizes. While it is more complex than Chapters 7 and 13, Chapter 11 is designed to help companies reorganize their debt without going out of business.

With guidance from our experienced legal team at Holston & Huntley, you may be able to use Chapter 11 bankruptcy to return your business to profitability. We assist entities of all sizes, from small businesses to large corporations. When you bring your financial crisis to our firm, you can trust us to work with the sense of urgency and close attention to detail your business requires.

If your business is struggling to stay afloat, now is the time to find a solution. Call (404) 620-3337 or send us an online message to get started today.

What Is Chapter 11?

Chapter 11 is more like Chapter 13 than Chapter 7, in that it reorganizes the filer’s debt (rather than liquidating nonexempt assets and discharging debt in a few months). As such, Chapter 11 generally takes no fewer than six months. For very large businesses with complex financial circumstances, Chapter 11 may take many years to complete.

Under the protection of the automatic stay, companies that file Chapter 11 receive time to restructure their finances and adjust their business operations. During this reorganization process, business owners typically retain control over their operations, but they need to obtain court approval for significant decisions (i.e. expanding operations, starting or ending a rental agreement, etc.). In some cases, Chapter 11 requires businesses to downsize, liquidating certain assets to repay creditors.

While most Chapter 11 cases are filed by business entities, it is technically available to individuals as well. Chapter 11 may be the best option for an individual if they owe too much debt to qualify for Chapter 13 and make too much money to qualify for Chapter 7.

Subchapter V: Chapter 11 for Small Businesses

With the passage of the Small Business Reorganization Act (SBRA) of 2019, Chapter 11 gained a new section called Subchapter V. Exclusively available to small businesses, Subchapter V is a type of reorganization that avoids many of the legal and financial roadblocks of traditional Chapter 11. Congress passed the SBRA because, for decades, large corporations were the only entities that could afford the costs and navigate the legal complexities of Chapter 11.

Under Subchapter V, small businesses benefit from:

  • A simplified, 3-5-year repayment plan, after which the court will discharge qualifying debts (like what individuals experience under Chapter 13)
  • The ability to confirm a reorganization/repayment plan without approval from creditors (which is not possible under traditional Chapter 11)
  • No disclosure statements or creditors’ committees (which is what normally makes Chapter 11 such a time-consuming and costly process)
  • Elimination of the Absolute Priority Rule (which normally prevents Chapter 11 filers from retaining ownership interests unless all their creditors are repaid in full)

To qualify for Subchapter V, your business must owe no more than $2,725,625 (although the CARES Act temporarily increased this threshold to $7,500,000 until March of 2021). At least 50% of this debt must have been accrued through commercial expenses.

Discuss Your Options During a Free Consultation

At Holston & Huntley, we urge struggling consumers and business owners to seek professional support sooner rather than later. Many try to avoid bankruptcy for as long as possible, but this often causes them to lose valuable (and time-sensitive) debt-relief opportunities.

If you are looking for a way to rescue your struggling business from financial ruin, bring your case to our experienced team. We have handled more than 1,000 cases, giving us the experience needed to provide you with top-tier legal counsel and representation. The sooner you get in touch with us, the more options you will have at your disposal, and the sooner we can get started on a strategic plan.

Call (404) 620-3337 or contact us online. We look forward to helping you overcome these challenging times.

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