Small Business Bankruptcy Attorney in Tampa, Florida

If you own or operate a small business, you might find yourself facing financial difficulties at some point on your business journey. You may even encounter insurmountable debt. In these situations—just like individuals or families who face unmanageable debt— you can turn to the U.S. bankruptcy code for possible relief. Your particular bankruptcy choices will hinge upon the structure of the business you’ve involved in: sole proprietorship, partnership, or Limited Liability Company (LLC). Chapter 11 is usually a good option for small businesses, but every case is different.

If your small business in or around Tampa is facing financial survival issues and you want to explore your options under the bankruptcy code, contact The Law Offices of David K. Blazek, P.C. for a consultation. The firm is proud to serve small businesses in Florida, including Tampa, Miami, Orlando, and Jacksonville, as well as parts of Georgia like Atlanta, Macon, and Columbus. 

The Business Structure & Bankruptcy

The structure of your business will play a large role in what options are available to you under the bankruptcy code. If you are a sole proprietor and all debts are in your name, then you can essentially file a personal bankruptcy—meaning you could use Chapter 7, 11 or 13, depending on your debt and income level and whether you wish to reorganize or liquidate. 

If you are a co-owner in a partnership, things get a bit trickier depending on whether it’s a general partnership or a limited partnership. In a general partnership, all partners are personally responsible for the debts of the business. In a limited partnership, the general partner—who runs the business—assumes responsibility for debts, and the limited partners are protected against liability unless they personally guarantee a loan. 

If you are a member in a Limited Liability Company (LLC), the only options are Chapter 11 and Chapter 7. In nearly all circumstances, filing Chapter 7 will immediately close the business. Chapter 11 will allow the business to keep operating under the concept of “debtor in possession.”  

Whatever the situation your small business finds itself in, it’s vital to reach out to a bankruptcy attorney who can help you fully understand your options.

The Three Bankruptcy Options

CHAPTER 13: This kind of bankruptcy is is only available for a sole proprietor who has assumed all debt in his or her name (or in some cases, partners or members who personally guaranteed a loan). Chapter 13 is a reorganization plan. You submit a schedule for repayment of your obligations to a creditors’ meeting.  

If approved, you then have three to five years to repay your creditors using your disposable income, what’s left after living expenses. At the end of the repayment period, you will be discharged from your debts, even if you only paid a fraction of them during the process. 

CHAPTER 7: Both individuals and businesses can file for Chapter 7, which is the liquidation option. Individuals and families, however, are granted various exemptions to retain some possessions—but businesses are not. If a business files for Chapter 7, it requires immediate closure of the operation, so the court-appointed trustee can sell off assets to satisfy creditors to the best extent possible. 

CHAPTER 11: This is similar to Chapter 13, but the business owner filing for bankruptcy becomes the debtor in possession. A trustee will not be assigned unless creditors push the business into Chapter 7. In the absence of a trustee to oversee everything, the debtor in possession—the business and its owner(s)—must propose a repayment plan to creditors and have them approve it. There is no time limit as in Chapter 13, and the debtor in possession continues to operate the business.  

Chapter 11 filings can be lengthy and costly, but small businesses might be able to save a lot of the cost by filing under a specific subchapter. Contact an attorney for more information about this option whenever you are ready to get started.