Bankruptcy Options For Small Businesses
It was recently publicly announced that the owner of five Central Florida malls is filing for Chapter 11 bankruptcy protection. Washington Prime Group is the owner of two malls in Ocala, one in Orlando, one in Altamonte Springs and one in Melbourne, as well as more than 100 others that are scattered across the country. Like many other businesses, Washington Prime cites the pandemic as a factor in its financial situation as well as the accompanying temporary mall closures and rent breaks. While Washington Prime has asserted that day-to-day operations are anticipated to continue as normal, uncertainty is understandably reportedly rising for the businesses that operate in and around the mall, many of which are small businesses that have faced their own financial challenges lately.
Fortunately, small businesses have their own options for financial recovery through bankruptcy.
Background on the Role of Small Businesses
According to the Small Business Administration, there are currently more than 31 million small businesses in this country. That means that businesses with less than 100 employees actually account for 99.9 percent of all American businesses. These sizable statistics illustrate just how dominant these businesses are and, therefore, how essential they are to our economy. As the example with Washington Prime demonstrates, even larger businesses and corporations often depend on small businesses in their own day-to-day operations.
The Bankruptcy Options For Small Businesses
Fortunately, you have multiple choices if you are seeking bankruptcy protection as the owner of a small business. Depending on factors such as the kind of business you own, your goals for your business, and the extent of the business debts, your best options are likely to file for bankruptcy under either Chapter 7, 11 or 13.
Chapter 7 bankruptcy can be a good option for small business owners who do not want to be in the position of needing to sell assets or negotiate with creditors. This is most often used to close down the business altogether as it doesn’t allow for business debt to be discharged.
Chapter 11 allows debt to be restructured, enabling a debtor to pay creditors over time while keeping the business up and running. However, this option can also be pricey, time-consuming, and have more extensive requirements.
Chapter 13 enables small business owners to keep their assets while they reorganize their debts and pay through a repayment plan. This is generally simpler and less expensive than filing for Chapter 11 but is also limited. This is only an option for those who can file for Chapter 13 as an individual – like sole proprietors.
Seek Legal Help Today
It can be difficult to see the business that you have worked so hard to build struggling financially. Filing for bankruptcy may be your opportunity at obtaining debt relief but this isn’t the time to attempt to do things alone as you try to figure out which kind of bankruptcy to pursue. You should instead consult with a bankruptcy attorney who can guide you throughout the bankruptcy process and help you ensure that you are seeking the right bankruptcy solution and undertaking the right steps along the way. As the Plantation bankruptcy attorneys at Nowack & Olson, PLLC, we are committed to helping both individuals and the owners of small businesses figure out the best way to reach financial recovery. Contact us today for a complimentary consultation about your best options for moving forward and getting a fresh start.