Articles Posted in Small Business Chapter 11 Bankruptcy

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Given the current global health crisis, many small businesses will now be needing the assistance of a Ch. 11 bankruptcy in order to stay in business.

Small businesses often struggle to reorganize effectively under Chapter 11 of the Bankruptcy Code. To address this issue, Congress passed the Small Business Reorganization Act of 2019, effective February 2020. The Act aims to make small business bankruptcies faster and less expensive, thereby making Ch. 11 a viable option for small businesses who previously could not afford to take advantage of Ch. 11 reorganization.

The Act applies to business debtors with secured and unsecured debts totaling less than $2,725,625. However, the CARES Act temporarily increased the debt limit to $7.5 million for cases filed on or before March 27, 2021 – so for the next full year.

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money-talks-1010I was super pleased to be interviewed recently on the radio show Money Talks.  In our 4/29/20 radio interview, we spent approximately 30 minutes covering some things people can do to address debt during COVID-19.  This includes student loan and mortgage forbearances and limitations under the CARES Act, discharging private student loans in bankruptcy, protecting and restructuring debt in a small business Chapter 11 under new rules and on and on.  Take a listen.  Maybe you’ll learn something you didn’t know before and can make this time work for you to reduce debt.

Please check out our News page where this interview is linked.


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As a small-business owner, you may have been especially hard-hit by the recent global health crisis. When revenue drops unexpectedly, it can be hard to keep a small business afloat.

At Arkovich Law, we understand what you are going through. We are committed to helping you reduce your debts and regain control of your finances while keeping your doors open.

Our attorneys have many years of bankruptcy experience, including Chapter 11 cases of all types.  One of our attorneys also has an MBA, and her on the ground experience has helped many businesses over the years get back on their feet.

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Many small businesses will take advantage of Paycheck Protection Program (PPP) and other measures to keep afloat for the next couple months.  These plans hopefully will result in forgiveness of any funds used for payroll, rent and utilities.  But as we all knows, running a small business involves lots of other expenses.  Many businesses will draw down lines of credit while credit is still available.  Seeking forbearances for various business expenses may also be possible to conserve cash.  Owners may not take paychecks for awhile.

But eventually, shelter in place orders will subside.  What then?  Revenues won’t be what the once were for quite some time:  at least for the entertainment, travel and restaurant industry.  Many other industries too I’m sure.

How will these businesses remain in business?  Fortunately, the new Subchapter V Small Business bankruptcy rules went into effect in mid-February.  These weren’t caused by COVID-19, but the timing couldn’t have been better.  The debt cap was raised by the CARES Act from $2.7 million to $7.5 million for eligibility.  These small business Chapter 11 cases are streamlined and less expensive.  They are a means to reduce debt and the cost of carrying that debt — while remaining in business!

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