Philadelphia Business Bankruptcy Lawyer

When properly and strategically utilized, bankruptcy can be an immensely powerful financial tool not only with regard to management of existing debts, but also with regard to addressing your long-term goals and objectives.

However, bankruptcy is not restricted to individuals who need assistance managing personal debt. It can also be used by large and small businesses, including partnerships, corporations, and limited liability companies.

There are several different types of bankruptcy, which are known as “chapters” as they relate to various chapters of the U.S. Bankruptcy Code. In many cases, a business will file for bankruptcy under Chapter 11, which is sometimes referred to as “reorganization” bankruptcy, though Chapter 13 bankruptcy may be more appropriate for certain sole proprietors, depending on the circumstances.

Though Chapter 11 bankruptcy cases are less common than Chapter 7 or Chapter 13 bankruptcies, they can still present your business with a clear and comprehensive strategy for financial reorganization.

The Philadelphia Chapter 11 bankruptcy process begins when the filer files a petition in the appropriate bankruptcy court, which is typically the United States Bankruptcy Court for the Eastern District of Pennsylvania. Similar to the filer in a Chapter 13 case, the filer in a Chapter 11 case, known as the “debtor in possession,” will be required to comply with a plan of reorganization, which must be approved by the bankruptcy court.

Once this plan has been approved, certain debts from before its approval date, excluding those addressed by the reorganization plan, will be discharged, or eliminated. However, the business must adhere to the plan rigidly and consistently. Depending on the complexity of the case, a Chapter 11 bankruptcy may take up to several years to complete.

While Chapter 11 bankruptcy can be a lengthy and complicated process, its benefits are highly worthwhile for many small companies, mid-size businesses, and large corporations. Indeed, a Chapter 11 bankruptcy may even be able to save a business that is on the verge of collapse, if intervention is swift and skillful. Moreover, Chapter 11 bankruptcy can afford your business much-needed time to create a viable plan for the company’s future. Additionally, a feature of bankruptcy known as the “automatic stay” can provide immediate relief from collection actions such as bank levies, repossession, and foreclosure.

Chapter 13 bankruptcy is available only for individuals, such as sole proprietors. A corporation, limited liability company, or partnership may not file for bankruptcy under Chapter 13. If you are a sole proprietor who is considering bankruptcy in Philadelphia, the attorneys of Sadek Bankruptcy Law Offices can assess your company’s financial status to determine whether Chapter 13 or Chapter 11 is the more suitable option for you.