Navigating Small Business Bankruptcies in Florida: Stiberman Law’s Expertise

Running a small business is no easy task, and financial challenges can sometimes be overwhelming. If you find yourself in a situation where your small business is struggling to stay afloat, bankruptcy relief might be an option worth considering. But what exactly is bankruptcy, and how can it help your small business? In this article, we’ll explore the types of bankruptcy available to small businesses, weigh the pros and cons of filing, and discuss some alternatives to bankruptcy relief.

Types of Bankruptcy for Small Businesses

Two main types of bankruptcy relief are available to small businesses: Chapter 7 and Chapter 11. Each type has its specific process and benefits, so it’s crucial to understand the differences before deciding which is right for your business.

Chapter 7 Liquidation Bankruptcy

Chapter 7 bankruptcy, also known as liquidation bankruptcy, can help small businesses (a) eliminate their debts by selling off their non-exempt assets and (b) shut down operations orderly. Once the assets are sold, the Chapter 7 Trustee distributes the proceeds among the creditors, and any remaining debts are discharged. This option is best suited for businesses with no viable recovery path and needs to shut down permanently. 

How Does Chapter 7 Business Bankruptcy Affect Personal Liability?

Chapter 7 bankruptcy is a form of bankruptcy that allows businesses to liquidate their assets and use the proceeds to pay off creditors. However, if the business owner(s) personally guaranteed a business debt, they may still be liable for the debt even after the business has filed for Chapter 7 bankruptcy. Additionally, if the business owner(s) engaged in fraudulent or illegal activities that led to the bankruptcy, they may still be personally liable for any resulting debts.

Chapter 11 Reorganization Bankruptcy

Chapter 11 bankruptcy is a reorganization plan that allows small businesses to restructure their debts and continue operating. This type of bankruptcy relief involves negotiating new repayment terms with creditors, such as reduced interest rates, extended repayment periods, or debt forgiveness. Chapter 11 can be a good option for businesses with a solid foundation and a viable plan for future profitability but need some financial relief to get back on track.

Subchapter V bankruptcy protection

Until recently, high costs and complexity presented a barrier for small businesses seeking Chapter 11 Bankruptcy protection. This changed when Congress passed the Small Business Reorganization Act of 2019. It is specifically designed to help small businesses struggling with debt reorganize and regain financial stability.

Subchapter V bankruptcy protection provides a streamlined process for small businesses to reorganize their debts and get back on track. It includes several key features that are designed to make the process easier and more affordable for small businesses, including:

1. Increased debt limit: Under Subchapter V, the debt limit for small businesses is increased from $2,725,625 to $7,500,000, making it easier for more businesses to qualify.
2. Simplified process: The Subchapter V process is streamlined and simplified, with less paperwork and fewer court hearings than a traditional bankruptcy.
3. Plan confirmation: The plan confirmation process is also simplified, with the bankruptcy court required to hold a confirmation hearing within 60 days of the plan being filed.
4. Trustee: A trustee is appointed to oversee the bankruptcy process and work with the debtor to develop a reorganization plan that is feasible and realistic.
5. Discharge: Small businesses that successfully complete the Subchapter V bankruptcy process may be eligible for a discharge of some or all of their debts.

Subchapter V bankruptcy protection can be a valuable tool for small businesses struggling with debt and needing help reorganizing and regaining financial stability. However, it’s important to note that not all businesses are eligible for this type of relief and that the process can be complex. It’s recommended that businesses consult with a bankruptcy attorney to determine whether Subchapter V bankruptcy protection is the right option for them.

Pros and Cons of Filing for Bankruptcy

Pros of Bankruptcy Relief

Financial Fresh Start

Filing for bankruptcy can provide a financial fresh start for struggling businesses. Once the bankruptcy process is complete, the business is no longer responsible for the discharged debts, allowing the owner to move forward without overwhelming debt.

Automatic Stay

When you file for bankruptcy, an automatic stay goes into effect. This means creditors are temporarily prohibited from pursuing collection efforts, such as lawsuits or wage garnishments. This can provide much-needed breathing room for small business owners, allowing them to focus on rebuilding their businesses without constant creditor harassment.

Cons of Bankruptcy Relief

Negative Impact on Credit

Filing for bankruptcy can have a long-lasting negative impact on the business’s ability to obtain credit in the future. This can hinder the growth of your business and make it challenging to bounce back after bankruptcy.

Costs and Time Commitment

The bankruptcy process can be expensive, with court fees and attorney costs adding up quickly. Additionally, the time-consuming nature of bankruptcy proceedings can take a toll on small business owners already stretched thin managing their day-to-day operations.

Alternatives to Bankruptcy Relief

Before considering bankruptcy, it’s important to explore all possible alternatives. Depending on your financial situation and long-term goals, some of these options might be more suitable for your business.

Debt Negotiation

Debt negotiation involves working directly with creditors to establish new repayment terms, such as lower interest rates or extended repayment periods. This can help reduce your monthly payments and make your debt more manageable. If your creditors are willing to negotiate, this option can be a more cost-effective and less damaging alternative to bankruptcy.

Small Business Debt Relief Program

Some small business debt relief programs are designed to help businesses avoid bankruptcy by providing financial assistance or counseling services. These programs may offer debt management plans, financial education, or even direct financial aid in some cases. Research the available programs in your area to see if any of them might be a good fit for your business.

Conclusion

Bankruptcy relief can be a lifeline for small businesses drowning in debt, but it’s not a decision to be made lightly. It’s crucial to weigh the pros and cons of filing for bankruptcy and explore all available alternatives before making a decision. Suppose you’re considering bankruptcy for your small business. In that case, consulting with a bankruptcy attorney or financial advisor is a good idea to help you navigate the process and determine the best course of action for your unique situation.

For more detailed information on what happens when a business declares bankruptcy, you can refer to the article What Happens When a Business Declares Bankruptcy?.

Stiberman Law’s Experience in Small Business Bankruptcies in Florida

Stiberman Law is a Florida-based law firm with extensive experience helping small businesses navigate bankruptcy. The firm understands bankruptcy can be difficult and emotional for business owners, and their team is committed to providing compassionate and effective legal guidance.

Stiberman Law has helped numerous small businesses in Florida file for Chapter 7 and Chapter 11 bankruptcy and the newly introduced Subchapter V bankruptcy protection. Their team deeply understands the bankruptcy process, including the complexities involved in reorganizing debt and negotiating with creditors.

One of the key areas of expertise for Stiberman Law is helping small businesses in Florida take advantage of the new Subchapter V bankruptcy protection. The firm’s attorneys are well-versed in the nuances of this new form of bankruptcy relief and can guide small business owners through the process from start to finish. This includes helping businesses determine their eligibility for Subchapter V, developing a feasible reorganization plan, and working with creditors to negotiate debt repayment terms.

Stiberman Law is committed to providing personalized service to each of its clients. They understand that every small business is unique, and they take the time to listen to their client’s concerns and develop tailored solutions to meet their needs. Their attorneys are dedicated to helping small businesses in Florida regain their financial footing and get back to doing what they do best – running their businesses.

Robert Stiberman is a highly respected bankruptcy attorney with years of experience helping businesses navigate the complexities of bankruptcy law. He is known for his expertise in Chapter 11 bankruptcy, which allows businesses to reorganize and repay their debts while continuing operations. Mr. Stiberman holds admission to the United States District Court for the Southern, Middle, and Northern Districts of Florida, and is authorized to represent bankruptcy clients throughout Florida.

Mr. Stiberman earned his Juris Doctorate from the University of Miami School of Law and has been a member in good standing of the Florida Bar since 1998, maintaining an impeccable standing within the legal community. Moreover, he brings a wealth of experience as a former Supreme Court Certified Mediator, augmenting his ability to facilitate constructive negotiations and mediations. 

Mr. Stiberman has more then 15 yeas of experience serving bankruptcy clients throughout Florida and has successfully filed and obtained a discharge in more than 1000 bankruptcy cases. Robert is one of the top bankruptcy attorneys in Florida, with a track record of success to prove it. Robert and the office team consistently receive positive reviews for their hard work.

In conclusion, if you are a small business owner in Florida struggling with debt, Stiberman Law can provide the legal guidance you need to navigate the bankruptcy process successfully. With their extensive experience in small business bankruptcies, their team of attorneys can help you explore your options and find the best path forward for your business.

FAQs

1. How long does the bankruptcy process take?
   The length of the bankruptcy process varies depending on the type of bankruptcy filed. Chapter 7 typically takes 4 to 6 months, while Chapter 11 can take several years to complete.
2. Can I keep my business running if I file for bankruptcy?
   Depending on the type of bankruptcy filed and the circumstances of your business, it may be possible to continue operating your business during and after the bankruptcy process. Consult with a bankruptcy attorney to discuss your options.
3. What types of debts can be discharged in a business bankruptcy?
   Unsecured debts, such as credit card debt, medical bills, and personal loans, are typically dischargeable in bankruptcy. However, some debts, like certain taxes cannot be discharged.
4. Will I lose all of my assets if I file for business bankruptcy?
   The answer depends on the type of bankruptcy you file and your specific circumstances. In Chapter 7, non-exempt assets will be sold to pay creditors, while in Chapter 11 you may be able to keep your assets as part of your repayment plan.
5. How do I know if bankruptcy is the right option for my small business?
   Determining if bankruptcy is the right option requires careful consideration of your business’s financial situation and long-term goals. Consulting with a bankruptcy attorney or financial advisor can help you assess your options and make an informed decision. It’s crucial to weigh the pros and cons of bankruptcy and explore alternatives before committing to the bankruptcy process.