Can Bankruptcy Save My Connecticut Small Business?

As a small business owner, making ends meet can be stressful, especially during financial downturns or seasonal lean periods. You may worry that you won’t be able to pay your employees’ payroll while paying off company debts. Bankruptcy is a powerful remedy which may be one option, although it is probably not the only option. Speaking with a Connecticut small business bankruptcy attorney could help you chart a course which utilizes bankruptcy, and it may also reveal alternative business debt relief options.

Small Business Bankruptcies Don’t Mean Losing it All

Filing for bankruptcy can feel like admitting defeat – that your business has failed. But some of the largest businesses in the U.S. have Chapter 11 bankruptcies in their histories. A small business bankruptcy doesn’t mean the end for your business venture. It simply means that the company has not been profitable and needs to reorganize its debts. There are any number of reasons this can happen – from losing a key employee to supply-chain issues and unexpected inflation.

A Chapter 11 bankruptcy is a tool for small business owners to reorganize their companies under a new name and legal identity while at the same time constructing a plan to resolve their business debts. As a business owner, you can lay out a plan for the future of your business under the new corporate structure that includes paying off secured debts and unpaid taxes, and distributing the company’s remaining income among the various unsecured creditors with claims. While the bankruptcy does signal the end of one chapter for your business, it also creates a path forward toward a profitable future.

Personal Bankruptcy vs Small Business Bankruptcy

If you operate your small business as a sole proprietorship, doing business as your company without formal incorporation paperwork, bankruptcy could implicate both your business and your personal financial goals. Even individuals can file for a Chapter 11 reorganization, but when they do, it applies to everything they owe – not just their business debts. In addition, some secured business debts can affect a business owner’s personal credit if they go unpaid.

It is important for sole proprietors and general partners in unincorporated partnerships to discuss their full financial picture with a small business bankruptcy attorney. Entering into a Chapter 11 reorganization can restrict your ability to obtain personal loans, mortgages, or student loans for your family. You need to understand those effects so you can make the right choice for your company’s future. In some cases, a Chapter 7 bankruptcy may be a better choice for a small business owner without substantial non-exempt property because it resolves the issue more quickly and does not commit you to ongoing payments.

Small Business Debt Relief Options

While bankruptcy isn’t the end for your business, there are good reasons to avoid filing a small business bankruptcy unless you have to. The good news is that there are often small business debt relief programs available to help you bridge the gap between income and obligations as you improve your company’s stability. For example, many commercial creditors are quite willing to negotiate repayment of small business debt, extending the time you need to pay down your balance. You may also be able to refinance your company’s loans and debts to take advantage of the business credit you have developed since your company began. A small business bankruptcy attorney can help you take an objective look at your total financial picture and decide whether to pursue debt relief options or simply file for bankruptcy, reorganize, and start again without the weight of those unsecured debts weighing your company down.

Talk to a Small Business Bankruptcy Attorney

At Lawrence & Jurkiewicz, we know how hard it can be to build a small business and keep it running in the face of financial challenges. We can help small business owners resolve their corporate debts and find debt relief to avoid filing a small business bankruptcy. We will meet with you to review your financial circumstances and help you decide whether to file a Chapter 11 business bankruptcy, or whether another solution will be more appropriate to your situation. We want to help you make the right decisions for you and your business. Please call (860) 264-1551 or contact us for a consultation.