Chapter 11 Small Business Bankruptcy

Chapter 11 Small Business Bankruptcy & Subchapter V

Chapter 11 Small Business Bankruptcy Attorneys serving Salt Lake City and all of Utah. Call today to discuss reorganization options for your business with an experienced bankruptcy attorney.

What Is Chapter 11 Bankruptcy?

Chapter 11 bankruptcy is a "reorganization" bankruptcy primarily used by businesses that want to continue operating while restructuring their debts. Under Chapter 11, the business — as a "debtor in possession" — proposes a plan of reorganization to pay creditors over time. If the plan is confirmed by the court, the business can emerge from bankruptcy with a restructured debt load.

Subchapter V — The Small Business Bankruptcy Reform

In 2019, Congress created Subchapter V of Chapter 11 specifically for small businesses. Subchapter V offers significant advantages over traditional Chapter 11:

• No committee of unsecured creditors — reducing administrative costs significantly
• A standing trustee who facilitates the plan process but doesn't replace management
• Faster process — plan must be filed within 90 days of petition date
• Easier confirmation — can confirm a plan over creditor objection more easily than traditional Chapter 11
• Owner can retain equity without paying unsecured creditors in full if the plan is feasible and in good faith

When Chapter 11 Makes Sense for a Small Business

• The business is fundamentally viable but burdened by excessive debt
• The business has tax liabilities it cannot pay currently but could pay over 3–5 years
• The business needs to reject burdensome contracts or leases
• The business needs to cram down secured debt to the value of collateral
• Orderly restructuring will produce better results than immediate liquidation

Tax Issues in Chapter 11

As a tax and bankruptcy law firm, we provide unique expertise in handling the tax implications of business reorganizations. Tax claims are often the largest creditor in small business bankruptcies, and proper handling of these claims can be the difference between a successful reorganization and conversion to Chapter 7.

Contact Us Today

Call Michelle Turpin P.C. at (801) 685-0552 to discuss whether Chapter 11 reorganization makes sense for your business.