- April 14, 2021
- Kelvin Birk
- Bankruptcy
Whether due to declining sales, increased business competition, or difficult economic headwinds, there are many reasons why business owners can struggle with mounting and unmanageable debt. Creditors may be calling, and banks are pressuring you to repay loans. If this sounds like your situation, it may be time to declare a business bankruptcy. Rather than being a discouraging end to your business, it can actually provide a fresh start for you and your family. Whether you dissolve the business altogether or simply restructure its debt, there are multiple bankruptcy options to explore.
At Birk Law Firm, you can ask our bankruptcy attorney as many questions as you like about the options available to you. We are a smart and compassionate law firm that guides and supports our clients throughout the entire business bankruptcy process. To find out more about how we can help, call us for a free consultation at 573-332-8585.
Different Types of Business Bankruptcy
In Missouri, federal bankruptcy law governs all business bankruptcy proceedings. Whether you liquidate your business or restructure debt while continuing day-to-day business operations, there are several different chapters of bankruptcy that can help you achieve your goals. Depending on your circumstances, your business debt can be discharged, reclassified from secured to unsecured, or financial terms and rates can be updated and changed. Typically, a bankruptcy can include a combination of these. Following are various types of business bankruptcies:
Chapter 7
To qualify for relief under Chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). Chapter 7 can be used by corporations or limited liability companies (LLCs) that are going out of business. The goal is an orderly business liquidation. But unlike Chapter 7 for individuals, Chapter 7 for businesses does not include a discharge of debts. Businesses that no longer exist typically have no assets for creditors to claim. There are pros and cons to Chapter 7 business bankruptcies, and a skilled attorney can advise you. To learn more, see Chapter 7 Bankruptcy Basics at USCourts.gov.
Chapter 11
Typically referred to as a business “reorganization” bankruptcy, Chapter 11 is for business owners who want to continue operating their enterprise but need help in restructuring debt and/or achieving more favorable financial terms. Chapter 11 typically offers the most options and flexibility for business owners. A bankruptcy petition can be filed voluntarily by the debtor or it may be an involuntary petition, which is filed by creditors that meet certain requirements. Under Chapter 11, a petitioner will create a court-approved reorganization plan and continue to operate the business while debt is restructured. 11 U.S.C. §§ 301, 303. To learn more, see Chapter 11 Bankruptcy Basics at USCourts.gov.
Chapter 12
Chapter 12 bankruptcy is designed for family farmers or family fishermen with “regular annual income.” Chapter 12 allows financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. In this way, farmers and fishermen can continue to run their businesses while pursuing bankruptcy. To learn more, see Chapter 12 Bankruptcy Basics at USCourts.gov.
Chapter 13 (in rare circumstances)
While Chapter 13 is typically a bankruptcy for individuals, in some circumstances people who are self-employed, sole proprietors, or operating an unincorporated business can be eligible for Chapter 13 relief as long as the individual’s unsecured debts are less than $394,725 and secured debts are less than $1,184,200 (sums are adjusted periodically based on consumer price index). 11 U.S.C. § 109(e). A corporation or partnership cannot be a Chapter 13 debtor. To learn more, see Chapter 13 Bankruptcy Basics at USCourts.gov.
What happens when you file bankruptcy for a business?
The first and most important step in pursuing a business bankruptcy is choosing the right bankruptcy law firm. Attorney Kelvin Birk is highly respected in the Cape Girardeau community, and he represents both in-state and out-of-state clients. Kelvin Birk is a lawyer as well as a certified public accountant, with more than 30 years of experience in accounting and tax and business consulting, and more than 20 years of experience in numerous legal matters. This combined expertise allows him to provide a level of service above that of other firms.
What happens when you file bankruptcy for a business depends, to some extent, on which bankruptcy chapter you pursue. You will begin by consulting with your bankruptcy attorney to initiate the process, and then you’ll need to collect a wide variety of paperwork including loan documents, bank statements, business operations data, and other pertinent materials. You will need to pay bankruptcy filing fees with the court. If you file a reorganization-type bankruptcy (as opposed to a liquidation bankruptcy), you will need to work with your attorney and the court to create a business reorganization plan that details how you will pay back certain debts before others can be discharged. Eventually, you and your business will be able to move on and start fresh, leaving behind your current financial difficulties.
Contact the Birk Law Firm Today
Attorney Kelvin Birk has helped countless business owners just like you who faced financial difficulties and were unsure where to turn. You can read testimonials from many of our satisfied clients. Kelvin Birk is a lawyer and a CPA, so he wears both a legal and a financial hat when advising you on business matters. It’s like getting two professionals in one. Whether significant debt is forcing you to close your business or you are simply wanting to restructure debt with more favorable terms, Birk Law Firm can help you achieve your business goals. We can help you achieve a firmer footing and put you on the path to a brighter financial future. Birk Law Firm will walk beside you every step of the way as you pursue a business bankruptcy. You don’t have to go through this alone. To find out more about how we can help, call us for a free initial consultation at 573-332-8585.
Attorney Kelvin Birk
Kelvin Birk is a lawyer as well as a certified public accountant, with more than 30 years of experience in accounting and tax and business consulting, and more than 20 years of experience in numerous legal matters. This combined expertise allows our law firm to provide a level of service above that of other firms. Whatever your legal situation, your attorney at Birk Law Firm can counsel you as to the tax implications. We have experience in providing myriad legal representation services to residents of southeast Missouri and other areas. [ Attorney Bio ]
