The attorneys at Gillman & Gillman LLC are experienced New Jersey Bankruptcy attorneys who have represented Small Businesses and their owners in Chapter 11 New Jersey Bankruptcy cases since 1981. While the laws may change, our commitment to providing our New Jersey Bankruptcy clients with honest advice does not. By limiting our practice to representing individuals and Small Businesses experiencing serious debt problems, Gillman & Gillman, LLC are New Jersey Bankruptcy lawyers who can help you learn your legal rights and use the laws that protect you by eliminating or restructuring your debts Whether the business debt problems are a single creditor suing you and the business in a lawsuit or a pile of accumulated debt, it is important to consult with an experienced New Jersey business bankruptcy attorney to learn your rights and review all of your options to protect you and your small business.
CAUTION: In our experience, one of the most common errors we see our clients make is waiting to consult an attorney experienced in small business debt issues. Small business owners assume that they don’t need to consult an attorney until things are “much worse” or feel that attorneys who are experienced in Small Business Debt will force them to close or cost too much. We have assisted many Small Business owners in all stages of business debt and believe that it is never “too early” to consult an experienced attorney to know your rights, options, and to be able to make the best business decisions. Your creditors have attorneys. Small business owners need one too.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is often thought of as the commercial bankruptcy option for businesses, sole proprietors and partnerships seeking to restructure their debts while they liquidate assets and restructure payment plans with creditors. While Chapter 11 is primarily designed for businesses, certain individuals may also qualify if their debts exceed a certain amount.
What Can Chapter 11 Do?
A chapter 11 bankruptcy case of a corporation (corporation as debtor) does not put the personal assets of the stockholders at risk other than the value of their investment in the company’s stock.
A sole proprietorship (owner as debtor), on the other hand, does not have an identity separate and distinct from its owner(s); accordingly, a bankruptcy case involving a sole proprietorship includes both the business and personal assets of the owners-debtors. Like a corporation, a partnership exists separate and apart from its partners. In a partnership bankruptcy case (partnership as debtor), however, the partners’ personal assets may, in some cases, be used to pay creditors in the bankruptcy case or the partners may, themselves, be forced to file for bankruptcy protection.
Section 1107 of the code places the debtor in possession in the position of a fiduciary, with the rights and powers of a Chapter 11 trustee, and requires the performance of all but the investigative functions and duties of a trustee. These duties are set forth in the Bankruptcy Code and Federal Rules of Bankruptcy Procedure.
Such powers and duties include accounting for property, examining and objecting to claims, and filing informational reports as required by the court and the United States trustee, such as monthly operating reports. The debtor in possession also has many of the other powers and duties of a trustee including the right, with the court’s approval, to employ attorneys, accountants, appraisers, auctioneers, or other professional persons to assist the debtor during its bankruptcy case.
Other responsibilities include filing tax returns and filing such reports as are necessary or as the court orders after confirmation, such as a final accounting. The United States trustee is responsible for monitoring the compliance of the debtor in possession with the reporting requirements in a small business case.
Small Business Case Designation
Under the Bankruptcy Code, a Chapter 11 Bankruptcy may be receive a Small Business Designation. A small business case proceeds faster than a regular chapter 11 case because the court may conditionally approve a disclosure statement, subject to final approval after notice and a hearing and solicitation of votes for acceptance or rejection of the plan.
Chapter 11 Bankruptcy may be an effective way for a small business to reorganize its debt and develop a repayment plan that is presented to the bankruptcy court. We can help you negotiate a repayment plan that is beneficial to all involved. Chapter 11 cases are especially helpful if you have a current business downturn or debt problem, but you know that things will turn around in the short term. In many Chapter 11 payment plans, the client is eligible to pay a much lower percentage to unsecured creditors. If you have IRS or state tax problems, you can also restructure that debt over five (5) years in a Chapter 11.
- Failure to pay withholding taxes
- Sales tax
- Failure to file tax returns
- Purchase or sale of a business
- Business assets
- Offer and compromise
- Creditor issues