Business and Bankruptcy and other remedies
The bankruptcy code is not only for individuals but it can offer relief and reorganization options for a struggling business. Depending upon the status of the business and how it is operated a business owner can look to bankruptcy to gain leverage over the creditors that are crippling the operation of the business
Chapter 7 is often used to liquidate a closed business, the assets are sold to pay the vendors and any unpaid debts are no longer collectible against the company.
Chapter 11 may be an option if the business is viable and can gain the opportunity to reorganize. This is often used for larger businesses.
Subchapter V Chapter 11 reorganization – this option was signed into law in August of 2019 as a pathway for small to medium size business find a more streamlined process for reorganization.
Chapter 13 – while a business is cannot file a chapter 13 bankruptcy an individual who is a sole proprietor may be able to reorganize their debt under this chapter.
Non bankruptcy alternatives – ABC
ABC – Jacksonville Bankruptcy Lawyer Assignment for the Benefits of Creditors
In the state of Florida, Ch. 727 of the Florida Statutes authorizes the assignment of all assets to a court supervised intermediary, in order to benefit the creditors of a company. This option offers businesses a method for liquidating or selling their business under state court supervision, rather than through the federal bankruptcy court process discussed herein. You are not alone in this, many companies use this as an option.
In Florida, the ABCs are similar to a Chapter 7 bankruptcy sale. There are significant differences between bankruptcy and an assignment, and we can cover this in detail when we meet for a free consultation. A bankruptcy can be more expensive and time consuming than the procedure associated with ABCs. Additionally, unlike bankruptcy where Trustees are blindly appointed in Ch. 7 cases, the insolvent business is able to select the Assignee for a quicker and potentially more favorable outcome.
There are times when going with an ABC makes much more sense than electing to file bankruptcy or to engage in any other type of action designed to eliminate the burdens of your business’ debt. Call today!