Lefkovitz & Lefkovitz
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615-686-2279
Cookeville Office
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We help individuals and businesses find the right solution to their money problems.

Answering your questions about business bankruptcy

You take pride in your business, and for good reason. Yet, like many businesses, you may have hit rough waters. There are times when market circumstances can challenge a business, and there are times when companies make decisions that don't pan out the way they believed they would. You are not the first business to look for relief.

Small business bankruptcies account for approximately ΒΌ to 1/3 of the more than 400,000 Chapter 11 bankruptcies filed since the Bankruptcy Code went into effect in 1979. Many of these businesses came out of bankruptcy as viable, successful businesses with less debt.

Here are some questions business owners often have when they are considering Chapter 11:

Can it really save my business?

Chapter 11 bankruptcy is a way for you to reorganize your business and pay back your debt over time. As long as you are not too far in debt, it can save your business and help you turn a profit again. The key is to start considering bankruptcy at the right time.

Will I be personally liable for business debts?

The answer to this question depends on how your business was set up, but many business structures (such as LLCs and corporations) shield individual owners from personal liability. If you have a sole proprietorship, your bankruptcy case will involve both your personal and business assets. It is a good idea to talk to a lawyer to protect your personal finances and your business' future.

Will I retain control of my business?

As the business owner, you will remain in control of your business throughout your bankruptcy. Your attorney and your creditors' committee will likely recommend changes to the way you run your business so that you are able to service your debt and run a successful business at the same time.

What is a creditors' committee?

A creditors' committee is made up of the unsecured creditors who hold the largest claims against you. Your bankruptcy trustee will appoint the committee. The committee will consult with you, investigate your operation of the business and help you form a business plan in order to service your debts.

What does business reorganization entail?

During your Chapter 11, you will develop a plan for your business that maximizes your ability to pay back your debts while keeping your business viable. You will need to explain what claims creditors have against you and how you plan to address them. Your creditors will vote on the plan and you will file it with the court.

Every reorganization plan is unique, which is why it is very beneficial to work with an attorney experienced in Chapter 11 bankruptcy reorganization.

How long does a Chapter 11 bankruptcy last?

Chapter 11 cases typically last between six months and one year. That is the time during which you will create your reorganization plan and have it confirmed by the court. The timeline for each case depends largely on how cooperative your creditors are, whether there are disputes over assets, and other complexities. It is not uncommon for Chapter 11 cases to extend beyond one year.

Consider what your business needs

Do not be afraid of bankruptcy. Instead, consider what it can do for your struggling business. A bankruptcy lawyer can look at your unique situation and determine whether Chapter 11 bankruptcy is the right approach to manage your business debt.

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Nashville Office
618 Church Street, Suite 410
Nashville, TN 37219

Phone: 615-686-2279
Fax: 615-255-4516
Nashville Law Office Map

Cookeville Office
312 East Broad Street, Suite A
Cookeville, TN 38501

Phone: 615-686-2279
Fax: 931-526-6244
Cookeville Law Office Map