${site.data.firmName}${SEMFirmNameAlt}
New Mexico Lawyers Serving New Mexico's Legal Needs Since 1997

Filing bankruptcy for your small business: Part 2

Last time, an overview of the Chapter 11 process was discussed to provide you with some necessary information regarding the process and what it can do for your business. This article will delve a little deeper into what you can expect if you pursue this option to help resurrect your small business.

Of course, you must file a petition, develop a plan of reorganization for court approval and wait to emerge from the process with the opportunity to be profitable and have fewer debts. However, small businesses receive slightly different treatment than large ones do when they enter into Chapter 11 bankruptcy.

Court oversight and requirements for a small business

When a small business files for Chapter 11, the court provides more control than it would for a large company. The court appoints a trustee, and you will be required to provide the court with reports on projected disbursements and cash receipts, along with profitability. Upon filing, the court requires the following: 

  • You must provide a current cash flow statement.
  • You must provide your company's most recent balance sheet.
  • You must provide your company's most recent income tax return.
  • You must provide a statement of operations.

You will have approximately 180 days to renegotiate the terms of your company's debts with its creditors and file a plan, which is more than many larger companies receive from the court.

Caveats for a small business

In addition to the above, you may need to know the following as you consider filing for Chapter 11:

  • Filing this chapter could cost tens of thousands of dollars before the process ends, which could be a significant amount of time depending on the circumstances.
  • Small business owners file a substantial number of Chapter 11 bankruptcies that the court ultimately converts to Chapter 7 because of a belief that the company cannot become profitable.
  • The U.S. Bankruptcy Code identifies small businesses by the fact that their debts are $2.19 million or less.

If your company's sole purpose is to own real estate, you may not file under this chapter.

Is it worth the risks?

The only one who can truly answer that question is you. Fortunately, you do not have to find the answers you need on your own. A New Mexico small business bankruptcy attorney could assist you in considering many possible factors and scenarios to save your business. He or she can also help you understand the Chapter 11 bankruptcy rules and laws, which can be complex and a challenge to understand.

Once you have the information you need, and you decide that taking the risk is worth the potential reward, having assistance with the process could prove invaluable. A successful Chapter 11 process could result in your business becoming profitable again.

No Comments

Leave a comment
Comment Information

Watch our videos to learn of the many ways we can help you with your legal needs.

Email Us For A Response

How can We Help You?

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Locations

Firm Location:

Giddens, Gatton & Jacobus, P.C.
10400 Academy Road NE
Suite 350
Albuquerque, NM 87111

Phone: 505-273-3720
Fax: 505-271-4848
Map & Directions

Firm Numbers:

  • facebook
  • linkedin
  • gplus
  • twitter
Review Us