Colorado Corporate Bankruptcy Attorneys
Let’s Save Your Business from Overwhelming Debt
Corporate bankruptcy is not something you should necessarily fear, and it is certainly not something that should make you feel ashamed as a business owner. Each year, countless companies file for corporate bankruptcy in some form. It is not just small mom-and-pop shops who need financial rescuing, either. Some of the biggest names in the country can be seen filing for bankruptcy each year due to unexpected product failures, partnerships that went sour, unfavorable lawsuits, and more.
If your Colorado business is on the verge of shuttering due to heavy debt, then it is time to consider your options with Jorgensen, Brownell & Pepin, P.C. and our team of corporate bankruptcy lawyers. We are here to help you explore the bankruptcy options for your business, which are typically limited to Chapter 11 or Chapter 7. Each business is unique, so each bankruptcy filing will be, too. With us by your side and managing your bankruptcy filing, you can be confident that you have chosen the right option. Importantly, we also work diligently to ensure your personal assets are protected from any corporate bankruptcy consequences.
We should talk about the bankruptcy options for your Colorado business today. Call us at (720) 809-8310 to begin.
What is Chapter 11 Bankruptcy?
When your business is in debt, but you do not want to give up on it yet, Chapter 11 bankruptcy could be the correct choice. Also called business reorganization bankruptcy, Chapter 11 allows a business to create an in-depth, multistep plan to get its debt back under control without closing its doors for good. As such, you should have a reasonable chance to repay your debt with some reorganization if you want to use Chapter 11.
Part of a business’s debt repayment plan needs to include reorganizing the company under the new supervision of a court-appointed trustee. This individual does not necessarily run the company but instead ensures it is doing its best with honest efforts to adhere to the repayment plan.
A successful Chapter 11 filing can allow your business to:
- Negotiate owed debts down to more manageable amounts
- Cancel contracts and leases early without penalty
- Reclaim seized or repossessed assets
Most importantly, Chapter 11 allows your business to stay open while it attempts to shake off its debt. Creditors are usually more agreeable to Chapter 11 than Chapter 7 because receiving some debt payments from a functioning business is much better than receiving no debt payments and forcing a business to shutter entirely.
Before a Chapter 11 bankruptcy plan can be put into action, it needs to be reviewed and approved by a panel committee of the creditors who are owed debts by the filing business. However, the Small Business Reorganization Act of 2019 made it simpler for smaller businesses to get Chapter 11 bankruptcy approval by allowing some filings to bypass the creditor committee altogether.
What is Chapter 7 for Businesses?
You might have known that consumers can file for Chapter 7 bankruptcy, also called liquidation bankruptcy. Did you also know that your business can, too? Using Chapter 7 might be the only option when there seems to be no reasonable way for your company to repay its debts, such as when there is a massive disparity between the debts and your company’s average income. Or Chapter 7 can become a viable option if you have already filed for Chapter 11 before but still could not overcome your debt.
For small businesses with minimal assets, Chapter 7 can also be a positive first choice. For example, if you run an appliance repair shop out of a small warehouse you rent, then trying to reorganize your company through Chapter 11 might be superfluous. In such a scenario, your business might own some tools, equipment, and miscellaneous necessities, but it does not own the land, building, corporate contracts and partnerships, or other significant assets.
Before Chapter 7 is approved and your business is officially dissolved alongside most or all of the dischargeable debt, your company has to pass a means test. Essentially, your business needs to earn an average income amount less than what the average corporate bankruptcy filer earns. If you do not pass the means test because your company is making too much money, then we will have to explore other options like Chapter 11 or different types of debt relief.
Jorgensen, Brownell & Pepin, P.C. and our Colorado corporate bankruptcy attorneys would like to hear from you if your business is struggling with overwhelming debt. As proud Coloradans who work out of law offices across the state, we feel a close connection to the people in our communities, especially small business owners like us. It would be our honor to see if we can help rescue your business through a successful bankruptcy filing that aims to erase as much debt as possible while protecting the most valuable assets of your business. We can also help ensure that your own personal finances and assets are not tied up in your corporate bankruptcy filing, keeping you and your family protected from any financial ramifications.
Contact us right away. Video and phone consultations are available.
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