Boston Bankruptcy Attorney Assists Business Owners Facing Financial Hardship

Massachusetts firm provides knowledgeable counsel on debt reorganization strategies

If your corporation, partnership or sole proprietorship is struggling with substantial debt and inadequate revenues, a Chapter 11 bankruptcy can possibly restore your solvency. With more than 35 years of experience, The Law Offices of Richard N. Gottlieb in Boston has helped Massachusetts companies and business owners tackle their debt issues through Chapter 11 and other available remedies. Should you face personal liability through a sole proprietorship or partnership, we can advise on ways to guard against personal liability.

What is Chapter 11 bankruptcy? 

Chapter 11 is sometimes referred to as reorganization bankruptcy because it is primarily used by businesses that seek to adjust their debt load, structure and operations to deal with financial difficulties. Once your business has filed for Chapter 11 protection, creditors must immediately stop collection efforts, such as harassing letters and phone calls. Unlike in a Chapter 7 filing, your business can keep its doors open as a debtor-in-possession rather than liquidating assets and closing up shop. Board-certified in business, as well as consumer, bankruptcy, Richard Gottlieb can develop a comprehensive plan for review by creditors and the court. From there, we help you avoid unnecessary delays and obstacles for the duration of the legal process.

Since 2019, many small businesses have utilized Subchapter V, which is a streamlined form of Chapter 11 bankruptcy available to qualifying companies. In these cases, a trustee is appointed to formalize a reorganization plan that satisfies both the debtor and creditors. Eligibility is limited to businesses whose debt does not exceed $2.75 million. This limit was increased to $7.5 million in response to the COVID-19 pandemic, but has now reverted to the original amount, which will be adjusted every three years. 

Skillful counsel for each aspect of the reorganization process

A Chapter 11 bankruptcy case can take anywhere from a few months to a few years to complete. The company’s owner remains as a debtor-in-possession unless the court detects fraud, dishonesty, incompetence or gross mismanagement that necessitates the appointment of a trustee. While the case is pending, the court or trustee must approve major decisions such as: 

• Selling assets, aside from inventory purchased by customers
• Signing or breaking a lease for property or equipment
• Obtaining or modifying mortgages or other secured financing arrangements for borrowing during the bankruptcy
• Discontinuing or expanding operations
• Modifying union, vendor, licensing and other contracts
• Paying fees and expenses to attorneys and other professionals

After filing a Chapter 11 petition, the debtor company enjoys an exclusivity period, during which only the debtor can propose a restructuring plan for addressing the debt. The court can extend or shorten the exclusivity period. When it expires, the creditor committee can propose a competing plan. Creditors generally look to secure a greater guarantee of repayment than the debtor is offering. They may request a liquidation of assets and/or a downsizing of operations to recover a higher initial payment on the debt. 

Although creditors have a voice in approving or rejecting a Chapter 11 plan, the court has the final say. It may confirm or reject a proposed restructuring based on several factors, such as whether the proposal is feasible and made in good faith. The judge will review the proposal in detail to see that it fairly addresses the interests of the creditors based on the specific circumstances.

Confirmation of the reorganization plan discharges business debts that were acquired prior to the plan’s confirmation. The plan forms new contractual terms that supersede all agreements entered into prior to the confirmation. Because the future success of your business depends greatly on the efficacy of your Chapter 11 plan, you should seek reliable advice from an experienced business bankruptcy attorney.

Benefits of Chapter 11 bankruptcy

Chapter 11 bankruptcy permits a business to continue operations while putting finances in order. Closing the doors for a length of time not only stops a company from collecting needed revenue but also forces customers and business partners to find other providers. My firm can advise you on using Chapter 11 proceeding to shield your business from creditors while giving you the legal authority to reorganize existing obligations. In many cases, large and small companies have taken advantage of this process to restore their solvency and move toward profitability. 

Alternatives to Chapter 11 for business owners dealing with serious debt

While Chapter 11 reorganization is the right solution for many businesses, each debtor needs understand all available options in case a better solution exists. Some small businesses, particularly sole proprietorships, can utilize Chapter 13 to address business-related obligations. There are also debt-relief alternatives that do not involve bankruptcy, such as direct negotiation with creditors, sale of equity or business assets and consolidation of obligations under one loan. Whatever your specific situation entails, we will help you identify the remedy that gives your business the best opportunity to succeed. 

Speak with an accomplished Boston Chapter 11 bankruptcy attorney 

The Law Offices of Richard N. Gottlieb represents Massachusetts clients in Chapter 11 bankruptcy proceedings, including Schedule V cases. Please call 508-545-9598 or contact us online to schedule a consultation at our Boston office.