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Reorganization
Small businesses struggling to pay their debts may be able to reorganize by filing bankruptcy. While businesses can eliminate debts through Chapter 7, it is generally not the best option for anyone hoping to continue operating the business.
Whereas Chapter 7 involves liquidating a debtor's assets, Chapter 11 and Chapter 13 both involve debtors reorganizing or restructuring their debts. Chapter 13 is subject to strict debt limitations and is only available to small businesses that are sole proprietorships and certain types of partnerships, so many small businesses must file Chapter 11 in order to reorganize.
Lawyer for Small Business Reorganization in Cincinnati, OH
Are you hoping to reorganize your small business through bankruptcy? You owe it to yourself to evaluate all of your debt repayment options.
The Cincinnati bankruptcy attorneys of Steiden Law Offices assist small businesses in Northern Kentucky and all of Ohio. You can have our lawyer provide an honest and thorough evaluation of your case as soon as you call to schedule a free initial consultation.
Overview of Chapter 11 Reorganization in Northern Kentucky
- What are the advantages of filing Chapter 11 for a small business?
- How is Chapter 11 different for a small business?
- Where can I find more information about reorganization in Cincinnati?
Benefits of Chapter 11 Small Business Reorganization
Whereas corporations, some partnerships, limited liability companies (LLCs) are not eligible to file for Chapter 13 bankruptcy, Chapter 11 does not have any eligibility restrictions. Under 11 U.S.C. § 101(51C), a small business case is defined as a case with a "small business debtor"—defined under 11 U.S.C. § 101(51D) as a debtor engaged in commercial or business activities (other than primarily owning or operating real property) with total non-contingent liquidated secured and unsecured debts of $2,566,050 or less, and a case in which the U.S. trustee has not appointed a creditors' committee, or the court has determined the creditors' committee is insufficiently active and representative to provide oversight of the debtor.
Chapter 11 can be a costlier form of bankruptcy to file, but it can also offer numerous benefits to small businesses, including—but not limited to:
- Reduce Debts;
- Adjustment of Interest Rates;
- Automatic Stay Protection;
- Contracts May Be Revised / Reworked / Rejected;
- Sell Assets Free of Liens;
- Extend Payment of Unsecured Tax Debts;
- Borrow Money While In Reorganization; and
- Continue Business Operation.
Small Business Rules Under Chapter 11
A case designated as a small business case normally proceeds more quickly than other chapter 11 cases, but small business cases also involve different procedures than typical Chapter 11 cases. In addition to being subject to additional oversight by the U.S. trustee and additional filing and reporting duties, small business cases may also be involved in the following:
- No Creditors' Committee — While creditors' committees—unsecured creditors appointed by the U.S. trustee who hold the seven largest unsecured claims against debtors—typically play major roles in chapter 11 cases, a small business debtor will instead attend an interview with a U.S. trustee who will evaluate the debtor's viability, inquire about the debtor's business plan, and monitor the activities of the small business debtor during the case to identify as promptly as possible whether the debtor will be unable to confirm a plan. The lack of a creditors' committee can reduce the cost of reorganization.
- More Exclusive Time to File Reorganization Plan — Small business debtors have an exclusivity period of 180 days to propose reorganization plans. This deadline may be extended up to 300 days without interference from creditors.
- No Disclosure Statement — Before there can be votes on plans of reorganization, many debtors typically must file and get court approval of written disclosure statements which must provide "adequate information" concerning the affairs of the debtor to enable the holder of a claim or interest to make an informed judgment about the plan. In a small business case, the court may determine that the plan itself contains adequate information and that a separate disclosure statement is unnecessary.
Reorganization Resources in Ohio
Cincinnati | Programs for Small Business — Visit this section of the City of Cincinnati website for information about special programs available to local small businesses. Learn more about the MicroCity fund and Grow Cincinnati fund. You can also find information about the City of Cincinnati’s Small Business Enterprise (SBE) Program.
Chapter 11 | Bankruptcy Basics | United States Courts — On this section of the United States Court's website, you can learn more about the Chapter 11 bankruptcy process. Find information about how Chapter 11 works, the role of an examiner, and who can file. You can also learn more about cash collateral, adequate protection, and operating capital.
Steiden Law Offices | Cincinnati Small Business Reorganization Attorney
If you are hoping to reorganize your small business in Ohio or Northern Kentucky, it is in your best interest to make sure that you are working with experienced legal counsel. Steiden Law Offices has been helping clients all over the greater Cincinnati area for decades.
Our Cincinnati bankruptcy lawyers represent individuals in communities throughout Hamilton County in Southern Ohio as well as Boone County and Kenton County in Northern Kentucky. Call or complete an online contact form to have our attorneys review your case and answer all of your legal questions during a free, confidential consultation.
