Business Bankruptcy

Discuss Your Options with a Bankruptcy Lawyer

Is your business struggling? If so, you are not alone. The COVID-19 pandemic, worker shortages, and inflation have combined to create an extremely difficult business environment for the past several years. In this situation, it is important to know that you have options available, whether your business is on a larger scale or a small business. Our bankruptcy attorneys can help you choose the best option for your company.

Unfortunately, many struggling business owners wait far too long to consider their options. They think they might be able to right the ship, and they feel like they should be able to figure out their situation on their own. But, in many situations, there is simply nothing to figure out. Businesses fall on hard times, and there is nothing their owners could have done to avoid it.

Business Owners Should Seek Help Before It’s Too Late

Regardless of why your business is struggling, it is important that you speak with a New Jersey business bankruptcy lawyer promptly. While you may have several options available, some of these options could go away if you don’t seize the opportunity. Our team of bankruptcy attorneys will collaborate with you to analyze the risks and opportunities facing your business. We will assess various bankruptcy options and alternatives, assisting you in identifying a path forward that safeguards your legal and financial interests to the utmost extent possible

What Are the Signs That It Is Time to Consider a Business Bankruptcy?

As a business owner, how do you know when it is time to consider bankruptcy as an option? How do you identify the difference between a short-term cash flow issue and a much larger financial problem?

These are not easy questions to answer—and that is why it is important to work with an experienced New Jersey business bankruptcy lawyer rather than trying to make decisions on your own. While the following are all signs that it might be time to consider a business bankruptcy, it takes a comprehensive assessment to determine a business’s best path forward:

• Are you struggling to cover your business’s monthly expenses, even after cutting expenses that were unnecessary?
• Have you fallen behind on payments to vendors and suppliers who you’d normally pay right away?
• Have you been forced to lay off employees because you couldn’t afford to pay their wages, and is your business suffering due to a reduced workforce?
• Instead of using revenue, are you using borrowed money to pay your company’s bills and employees?
• Have you taken out multiple business loans? Or, have you taken out a personal loan to help keep your business afloat?
• Are you using other personal assets (i.e., using your personal car after turning in your leased company car) to keep your business costs down?
• Are you behind on your business’s employment taxes or quarterly estimated tax payments?
• Are you facing liens, repossession, foreclosure, or other collection action from your business’s creditors?

Each of these on its own could be a sign that a business bankruptcy is the best option for protecting your business—and yourself. If you are dealing with more than one of these issues, then you should absolutely speak with a New Jersey business bankruptcy lawyer to make sure you do not end up in a situation that is even worse than the one you are already in.

Business Bankruptcy Options 

As a business owner in New Jersey, you have three main options when it comes to filing for bankruptcy. The option you should choose will depend on various factors related to your business’s financial troubles and your own financial circumstances. When you contact us for a free initial consultation, New Jersey business bankruptcy lawyer Georgette Miller will sit down with you to discuss the viability of filing for:

Chapter 7 Business Bankruptcy

A Chapter 7 business bankruptcy is a liquidation bankruptcy. This means that the process involves disposing of the business’s assets in order to pay off its creditors (as much as possible), and it often—though not always—ends with the dissolution of the business. If your company does not have a viable path forward in light of the current economic circumstances, then it may be time to get a clean slate and start again.

Many business owners in New Jersey choose filing under Chapter 7 precisely for this purpose. While their current business may be struggling, they aren’t ready to abandon their business goals entirely. They are entrepreneurs, and they are passionate about bringing their ideas to life. Sometimes it works, and sometimes it doesn’t.

Businesses of all sizes can file for bankruptcy under Chapter 7. Whether you are a serial entrepreneur or have been running a family business for decades, if things aren’t working out, you should talk to a New Jersey business bankruptcy lawyer about filing under Chapter 7. Our attorneys can help you understand what it means to file under Chapter 7—what you will have to liquidate, what you want, and which creditors will get paid first—and make an informed decision.

Chapter 11 Business Bankruptcy

Unlike filing under Chapter 7, filing under Chapter 11 does not involve liquidating the company’s assets. Instead, in a Chapter 11 business bankruptcy, the goal is to establish a payment plan that allows the company to continue operating without facing liens, repossession, foreclosure, or other collection actions. The purpose of a Chapter 11 bankruptcy is to save the business, and it is the preferable option for business owners who aren’t ready to call it quits just yet.

In a Chapter 11 bankruptcy case, the business is classified as a “debtor in possession.” Rather than a trustee taking control of the company’s assets (as in a Chapter 7 liquidation case), in a Chapter 11 case, the business remains in control. While there are certain restrictions on what business owners can do while their companies’ Chapter 11 bankruptcy cases are pending (i.e., they may need court approval for extraordinary transactions), they can generally keep operating in the ordinary course.

At the end of the Chapter 11 bankruptcy process, the business will have a “reorganized” debt load. When you pursue a Chapter 11 business bankruptcy, you and your lawyer will work with the trustee and your business’s creditors to formulate a payment plan that lets you stay current on your business’s payment obligations over time. After this payment period, your business will be fully back on track, and its unmanageable debt load will be in the rearview mirror.

Chapter 13 Self-Employed Business Owner Bankruptcy

If you are a self-employed business owner, you may also have the option of filing for bankruptcy under Chapter 13. A Chapter 13 bankruptcy is similar to a Chapter 11 bankruptcy in that it involves reorganizing your debts with an affordable repayment plan.

Filing for bankruptcy is a good option for self-employed business owners who need help getting their expenses under control and either (i) don’t want to liquidate under Chapter 7, or (ii) don’t qualify under the Chapter 7 “means test.” A Chapter 13 bankruptcy allows you to continue running your business without the financial challenges you are currently facing.

Alternatives to Filing for Business Bankruptcy

Along with pursuing a business bankruptcy under Chapter 7, Chapter 11 or Chapter 13, business owners in New Jersey may have various other options as well. There are several potential alternatives to bankruptcy, all of which are options in different types of scenarios.

Along with helping you explore your bankruptcy options, New Jersey business bankruptcy lawyer Georgette Miller will also help you explore various bankruptcy alternatives. For example, sometimes, it will be possible to negotiate modified debt obligations outside of the bankruptcy process. This is somewhat similar to reorganizing debts under Chapter 11 or Chapter 13 on a smaller scale—and without court involvement. Oftentimes, creditors will be willing to negotiate changes to their terms in order to avoid the bankruptcy process. If working with one or a handful of your company’s creditors would be enough to avoid default or bankruptcy, then this could be the best and most cost-effective option.

To identify your options, our bankruptcy attorneys will speak with you, review your company’s financials and debt obligations, assess any current collection efforts or threats of collection, and process all of this information in light of your goals and priorities. We will then go over your options with you in detail, answer all of your questions, and help you make an informed decision about how best to resolve your business’s current financial problems.

Request a Free Consultation with a Bankruptcy Lawyer

Would you like to know more about the options that are available to struggling businesses in New Jersey? If so, we encourage you to contact us promptly. To request a free and confidential consultation, please call us at 866-340-2596 or tell us how we can contact you online today.