September 30, 2020

How to File for Bankruptcy After Coronavirus Shut Down Your Business

Many small businesses across the country are struggling to survive the challenges posed by the COVID-19 pandemic. If your business is searching for options and time to turn around operations or develop new business lines, bankruptcy can create that space and time. 

Many small businesses across the country are struggling to survive the challenges posed by the COVID-19 pandemic. If your business is searching for options and time to turn around operations or develop new business lines, bankruptcy can create that space and time. 

There’s a common misconception that filing for bankruptcy means the end of your business. But this is far from the truth. The right commercial bankruptcy attorney can help you navigate the process, restructure your debt, and turn the business around, returning it to success. Whether the pandemic has forced you to close your doors temporarily, damaged your finances, or both, you may be able to find relief through reorganization.

Keeping Your Business Through Chapter 11 Bankruptcy

If you are struggling to make ends meet but would like to keep your business, you may be able to save your company by filing for protection under Chapter 11 bankruptcy—assuming your company was turning a profit prior to COVID-19 but has now fallen on hard times. You and your attorney will negotiate a reorganization plan with your creditors that outlines a debt repayment schedule.

In the past, Chapter 11 bankruptcy was too drawn out and expensive for small businesses. But recent changes have made it more accessible than ever.

The Small Business Reorganization Act (SBRA) reduces the costs for small businesses and expedites the entire Chapter 11 process. To qualify for SBRA, a small business must have less than $7.5 million in debt and file under a particular subchapter of the bankruptcy code.

A Subchapter V Chapter 11 bankruptcy:

  • Makes bankruptcy available to more small businesses than in the past
  • Eliminates the requirement for a creditor committee
  • Allows the trustee to monitor the case
  • Streamlines the process

You will still need to file certain items with your bankruptcy paperwork, including a:

  • Recent federal tax return
  • Business balance sheet
  • Cash flow statement
  • Statement of operations

Business bankruptcy is a complex process. Your financial livelihood and reputation are just a few of the things at stake if you make a wrong choice. It’s always a good idea to have a qualified commercial bankruptcy attorney explain your options, negotiate your deal with creditors, and protect your interests.

Closing Your Doors for Good 

If staying open isn’t an option for your business, you can completely liquidate the business and shut the doors for good with a Chapter 7 bankruptcy, also known as “liquidation.” The courts will appoint a trustee to oversee the sale of your assets and the distribution of the proceeds to your creditors.

Chapter 7 bankruptcy is one way to clean the slate, As with any major financial decisions, however, it’s beneficial to consult a knowledgeable bankruptcy attorney about your options.

Speak With an Experienced Nevada Commercial Bankruptcy Attorney

If your business is suffering financially due to the coronavirus or any other reason, our Las Vegas commercial bankruptcy attorneys are here to help. At Schwartz Law, we provide personalized guidance through the bankruptcy process with a team of attorneys that care about you and the future of your business.  

Contact us today at 702-385-5544 or reach out to us online to schedule a consultation.