I don't need to tell you that times are tough.
It's hard enough running a small business. Long hours. Thin margins. Low profits. But the rewards are also good --- being your own boss, having the flexibility to do what you want, run things the way you always wanted to do.
And then you were blindsided. The coronavirus changed everything. What was hard became impossible. Business dried up. Customers disappeared. Supply chain issues. Employee issues. There were good reasons for these problems, but good reasons don't pay your bills.
You tried to hang on, paying your workers before you paid yourself, but then the money ran low, and you couldn't do it any longer. Your landlord kept calling, asking for money that you didn't--and couldn't--have. Didn't they recognize that you couldn't pay rent if you had no customers and no employees? But they didn't care. Neither did your suppliers, or your utilities, or...
And now, just when things are starting to loosen up, you can't get (or keep) good employees at a reasonable wage. Even billion-dollar fast food places are offering signing bonuses to get people to work for them!
How Can You Save Your Business?
Small Business Reorganization Act
May Be the Answer
So what can you do?
The new Small Business Reorganization Act, also called the "SBRA" or Subchapter V, took effect on February 19, 2020. A streamlined version of a Chapter 11 reorganization, the SBRA makes Chapter 11 a realistic option for many small businesses. And Brett Weiss literally wrote the book on Chapter 11 cases.
As co-author of Chapter 11 for Individual Debtors, published by LexisNexis, along with his forty years as a practicing attorney, Mr. Weiss has the depth of knowledge, insight and experience necessary to help you with your complex financial issues. A frequent national lecturer on the new Chapter 11 Small Business Reorganization Act, he knows how to restructure both business and individual debt to stop banks and debt collectors and let you move forward in your life without the crushing weight of debt problems.
Chapter 11 lets you pay back your creditors, in whole or in part, over an extended period of time. It may let you drastically cut your credit card and supplier bills. Another benefit of Chapter 11 for landlords and investors is its ability to let you restructure mortgages on your rental and investment property. You may be able to lower, or “strip down,” the principal balance of your mortgage to the current market value of the property, reduce the interest rate, wipe out arrearages and reamortize the loan. You can remove second and third mortgages and judgment liens from underwater properties, including your home. You can catch up payments owed the IRS and state taxing authorities (including property and trust fund taxes). And you may be able to lower the principal on some liens. Unlike Chapter 13, there is no limitation on the amount of debt, or its type, to qualify for Chapter 11.
The filing of a Chapter 11 will stop pending foreclosures and lawsuits. It can stop wage garnishments, bank attachments, liens and levies (even IRS tax levies).
Sound too good to be true? It's not. That's simply what a Chapter 11 filing is designed to do.
A Chapter 11 starts when your petition is filed with the Court. Documents relating to income and expenses, debts, assets (real estate as well as personal property—your “stuff”), and other financial disclosures must be prepared and filed.
Filing a petition under Chapter 11 stops most collection actions. The automatic stay stops foreclosures, garnishments and attachments—as well as creditor calls and letters—as soon as you file the petition.
Most Chapter 11 cases take between six and twelve months between filing and when your Chapter 11 Plan is approved, or confirmed, by the Court. Subchapter V cases are usually shorter.
Chapter 11 cases are the most difficult and complex under the Bankruptcy Code. See our Business Reorganization White Paper for a discussion of some of your options under Chapter 11. Chapter 11 wasn't really designed for individuals and small businesses, and many of the hoops you must jump through are the same ones that a large company must jump through. Even under the SBRA you need bankruptcy counsel who isn't put off by the newness of the Act or the difficulty of a Chapter 11. It's an involved and complex process. And to be honest, it isn't cheap. But the benefits of a Chapter 11 can be enormous. Very few consumer and small business bankruptcy attorneys have the knowledge or experience to handle your Chapter 11 case.
Listen to an interview with Brett Weiss and Dan Press, authors of Chapter 11 for Individual Debtors, in the LexisNexis Legal Newsroom.