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Prepare to file for bankruptcy during the pandemic

March 23, 2020

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Bankruptcy may be a legal tool for an individual or business in distress when other alternatives have been exhausted, such as restructuring, out-of-court negotiations with landlords and lenders, and preserving or obtaining cash through government programs. For some small businesses planning to shut down, bankruptcy is not needed. Instead, they simply cease to operate.

The most common types of small business bankruptcy include Chapter 7 and Chapter 11 – both stop creditors from continuing to collect while giving the individual or business time to plan a reorganization and renegotiate.  Currently, the Small Business Reorganization Act (SBRA) amends Chapter 11 to streamline and simplify bankruptcy under a new section 5 for smaller businesses.

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Contributor:

Annette Stanley