How to Navigate Bankruptcy If the Coronavirus Has Affected Your Business

In the midst of the novel coronavirus, many businesses have seen severe repercussions as it relates to business finances. From reducing the number of employees, having to take out additional loans, or ultimately considering closing their doors, businesses of all sizes are struggling to stay afloat as we continue in this pandemic. Here, the Maryland small business bankruptcy attorneys at Grossbart, Portney & Rosenberg, P.A. provide insight on how to navigate bankruptcy if the coronavirus has affected your business, and why seeking professional counsel may be the right choice for you. 

COVID-19 Impact Leads to Significant Increase in Bankruptcy Filings

As business owners pivot to adjust their strategies for the current climate, many are grappling with difficult decisions regarding job security for their employees and financial restructuring options. When the CARES Act and SBRA were passed in March, this gave businesses some relief as they worked to create a strategy to manage debts and business expenses. However, Chapter 11 bankruptcy filings are still up 26% from last year. So, when your business is in the midst of bankruptcy, how do you handle it? Bankruptcy can be a complicated process, and it is important to ensure that you are completing all the necessary steps to keep your finances in check, and ultimately alleviate debt. Below are recommendations and resources to help your business move forward with the bankruptcy process as efficiently as possible. 

Research Chapter 11 vs. Chapter 7 Bankruptcy Filing Options

The first step when navigating bankruptcy in the midst of the coronavirus is to determine whether your business will file Chapter 11 or Chapter 7 bankruptcy. Chapter 11 will be the most common chapter of filing for business bankruptcy, and Subchapter V of Chapter 11 allows small business owners to have greater control over their finances during the bankruptcy process. However, if your business does not qualify for Subchapter V of Chapter 11 bankruptcy, you are still able to file under Chapter 7. It is important to note that if your business has shut down already in the midst of COVID-19, you will not qualify for relief under this chapter. 

Remain Knowledgeable of Updated Legislation and Government Resources

During this time, you may feel overwhelmed as a business owner, not knowing where to turn next. This is an unprecedented time for all of us, and the entire country is battling with the unknown impact and timeline the coronavirus will have. That is why staying up-to-date with both Maryland and federal legislation can ensure that you are able to apply for additional resources as soon as they become available. This can be a huge help for your business during a time when you are struggling financially, and may assist your business in being able to keep your doors open. 

Understand Your Business Debts Are Generally Not Your Debts

One major consideration to remember during the bankruptcy process is that your business debts are not necessarily your debts. Your business likely goes into bankruptcy because you are unable to pay overhead costs, employees and other financial obligations, which do not correspond with your personal finances. This means that if you file Chapter 11 bankruptcy, creditors are unable to go after personal belongings such as your house, car or other assets unrelated to your business. While it is understandable that the bankruptcy process will still require significant changes in your daily operations, knowing that many of your personal assets are protected can be assuring.

Consult With Qualified Bankruptcy Attorneys Such As Grossbart, Portney & Rosenberg, P.A.

Finally, when working through the small business bankruptcy process, it is important to consult professional counsel to ensure that you work through your filing comprehensively. The Maryland bankruptcy attorneys at Grossbart, Portney & Rosenberg, P.A. have extensive experience in Chapter 7, Chapter 11 and Chapter 13 bankruptcy filings, as well as small business bankruptcy. Our priority is to be proactive in helping you navigate the complexities of the bankruptcy process, especially during this time of the coronavirus pandemic. To learn more about how our team of experienced attorneys can assist you, contact our Baltimore office today.