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Small Bankruptcy for Small Business

In February of this year, a new bankruptcy law took effect aimed at helping the small, closely held business restructure its debts over 3 to 5 years.  It is more streamlined, faster and less expensive that a typical Chapter 11 bankruptcy.  It allows business owners to negotiate their companies debts with banks, landlords and vendors.  And in March, the CARES Act temporarily increased the limits for secured and unsecured debts to $7.5 million.  While no one enters into business to file bankruptcy, it is good to know that if it is necessary to do so, more owners can save their business, not just close the doors.    

The new rules give small businesses options that make it easier to file for chapter 11, providing them more leverage to renegotiate leases and debts while continuing to operate, often under the same ownership.

Tags

bankruptcy, covid-19, business digest, turnaround