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Starting a business is always an act of faith, the combination of a dream and determination. But sometimes you can hit rough patches that make it impossible to move forward without help. In 2021, Chapter 11 and particularly subchapter V will be a valuable tool for keeping the dreams of small business owners alive.
Traditionally, Chapter 11 has been a tool used (and sometimes abused) by giant corporations. Either they played fast and loose with their finances and got caught (anyone remember Enron?) or, much more frequently, their business model didn't keep up with the times, e.g. Sears and Blockbuster Video, both giants in their day.
Unfortunately, what worked great for Wall Street was too cumbersome and expensive for Main Street. In 2020, Congress addressed a lot of the problems with chapter 11 that made it unrealistic for struggling small businesses by enacting subchapter V.
At their core, all Chapter 11s are bankruptcies and start with the same petition as Chapter 7 and 13. Successful ones manage to propose a plan, either of liquidation or reorganization.
What Subchapter V has done is to provide the same relief for companies owing $7,500,000 or less without the rules and procedures that made them overwhelming for most distressed businesses. Key differences of subchapter V.
If your small business has suffered from Covid restrictions and the downturn in the economy, don't give up. Call a bankruptcy lawyer who can help you understand what options may be available. I do free consultations and evaluations for any Northern Kentucky business struggling with debt.
If 2020's restrictions have left your business struggling to move forward in 2021, call to see if a Chapter 11 can help you keep your doors open and your dream alive.