Considerations For Business Owners
If a business debtor prefers to remain in business and avoid liquidation and/or the going-concern value of the financially troubled businesses is more valuable than its liquidation value, a reorganization under chapter 11 or chapter's 12 and 13, if eligible, may be the most attractive debt relief alternative.
Chapter 11 is typically used to reorganize a business, which may be a corporation, sole proprietorship, or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. Chapter 11 reorganizations are expensive, complex and require experienced legal representation.
Chapter 12 is designed for family farmers or family fishermen with regular annual income. It enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. Under chapter 12, debtors propose a repayment plan to make installments to creditors over three to five years. Chapter 12 eliminates many of the barriers family farmers or family fishermen debtors would face if seeking to reorganize under either chapter 11 or 13 of the U.S. Bankruptcy Code. Chapter 12 is more streamlined, less complicated, and less expensive than chapter 11, which is better suited to large corporate reorganizations.
Individuals who are self-employed or operate an unincorporated business, are eligible for chapter 13 relief as long as the individual's unsecured debts are less than $307,675 and secured debts are less than $922,975. These amounts are adjusted periodically to reflect changes in the consumer price index. A corporation or partnership may not file chapter 13.
Where can I get legal advice about my Bankruptcy issue or case?
If you have a Bankruptcy Law issue or case and want legal advice for your specific situation, call the law firm below to schedule an initial consultation.
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