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Running a small business is a dream for many entrepreneurs, but it comes with many challenges. The financial toll can leave one feeling overwhelmed and uncertain about the future. We understand that facing bankruptcy as a small business owner can be scary. However, with the right guidance and strategies, it is possible to recover and grow. Filing for bankruptcy can help a struggling business owner survive and ultimately thrive.
WHAT IS BANKRUPTCY?
The word ‘bankruptcy’ has a negative connotation. However, it’s important to not be afraid of it but instead seek to understand what it means. Bankruptcy is a legal process designed to help businesses eliminate or repay their debts under the protection of the federal bankruptcy court.
Below are three steps to help small business owners feel empowered to revive their business with the help of a trusted advisor.
Before taking the significant step of hiring a bankruptcy attorney, it is crucial to assess your financial situation. The first step in navigating bankruptcy as a small business owner is to take a comprehensive look at your finances. This includes managing your cash flow and reviewing all your assets and liabilities. This comprehensive assessment will provide a clear picture of whether bankruptcy is the most viable option for your business.
It’s also important to gather all necessary financial documents. For example, putting together balance sheets, income statements, and tax returns. By compiling all of these ahead of time, you are not only helping yourself but also your future attorney. Keeping these organized will save you time.
Choosing the
right attorney is a critical step. An experienced attorney will be able to advise you on the steps to take prior to filing bankruptcy. They will then be able to guide you through the complexities of bankruptcy law and help you make informed decisions for you and your business.
Finding an attorney who has experience in working with small businesses and has a track record of handling cases like yours is crucial. This is not something you will find at a small business workshop. However, you can seek referrals of attorneys from your professional network. There might be another small business owner you know that has walked in your shoes and has a recommendation.
Once you have selected an attorney, schedule a consultation to discuss your situation. Your first meeting will be an opportunity to ask questions, understand the bankruptcy process and develop a strategic plan for moving forward. Be prepared with a list of questions and topics to cover (such as differences between Chapter 7 and Chapter 11), what the costs are, potential timeline, and the impact filing will have on your business. It’s important to work with your attorney on a strategic plan so you have a clear path to stay on track.
By following these three essential steps, you can approach filing bankruptcy with confidence. The goal is to achieve the best outcome for your business that allows you to rebuild and move forward.
Though small businesses encounter many challenges throughout their life cycle, one of the most common issues facing small business owners today is dealing with the challenges that come from obtaining SBA loans due to the impact of COVID-19.
Many small businesses obtained either EIDL or PPP loans from the SBA to cover short term costs with the expectation revenues would return to normal after the pandemic. When the business’ revenues did not return to pre-COVID levels, business owners were confronted with much higher fixed costs and less revenue in which to operate.
In many of our client’s cases since the onset of COVID-19, we have been able to either restructure or greatly reduce a client’s SBA debt through a Chapter 11 proceeding, or more specifically, a subchapter V proceeding.
If you are looking for an experienced, bankruptcy attorney who focuses in working with small businesses, please contact the Chair of our Bankruptcy Group Steve Heimberger at
330-434-3000 or
sheimberger@rlbllp.com
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Disclaimer: The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship.
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