The economic crunch has spared no entity from financial stress. Like many individuals, businesses in Florida are also forced to consider filing for bankruptcy protection from mounting debt owed to their creditors. Nationwide statistics show that 57,788 business filed for bankruptcy last year. Although these figures represent both a decline in number of filings from 2011 and the lowest rate since the 2008 financial crisis, bankruptcy remains a viable option for businesses struggling with debt. Bankruptcy allows you to reorganize your business. It does not necessarily mean the end of your business. Many business owners find that there is life after bankruptcy.
Bankruptcy options for businesses
Florida bankruptcy law provides several options for businesses, depending on how your business is structured ― corporation, partnership, sole proprietor, etc. Before you file, you should consult with a Tampa bankruptcy attorney to determine which option is best for your business. Each option is explained in more detail as follows:
- Chapter 7 Business Liquidation. This process provides for complete liquidation of the business assets when a business is unable to repay its debts. The bankruptcy court appoints a trustee to oversee the sale and distributes the proceeds to the creditors.
- Chapter 11 Business Restructuring. This process allows a business to continue operation and provides protection from creditor collection processes. The bankruptcy court appoints a trustee to reorganize your business to operate more efficiently, allowing it to repay its creditors.
Means test exemption for business debt
The Bankruptcy Code exempts businesses filing under Chapter 7 bankruptcy from the means test, if the debts are primarily ― usually at least 50% ― business debts. Non-consumer business debt is defined as debt acquired in connection with your business or with the intent to make a profit.
At Westchase Law, PA, our experienced attorneys will guide you through the bankruptcy process to ensure that your business interests are well protected. We will help you understand how bankruptcy affects you and the financial future of your business.