Should My Business File a Chapter 11 Bankruptcy in Nevada?

Each year, Nevada businesses of all types and sizes file for bankruptcy under Chapter 11. It has become an increasingly common option for Nevada business owners to consider, and for good reason. Chapter 11 allows businesses to reorganize and eliminate debt while continuing to operate. But how do you know whether it’s time to reorganize a business through bankruptcy? What are the potential consequences, and what are the advantages? You should consider exploring these questions with an experienced business bankruptcy lawyer in Las Vegas.

Does Your Business Have Mounting Debt?

If your business is struggling with unsustainable levels of debt, it might be time to consider Chapter 11 bankruptcy. There are many types of business debt, including Federal and State tax liabilities, Small Business Administration (SBA) and other secured loans, Merchant Cash Advance (MCA) and Revenue Purchase Agreement (RPA) loans, and unsecured debts like credit cards. Reorganization under Chapter 11 can make sense where liabilities outweigh assets, the business is unable to maintain operations while servicing its debts, and the situation will worsen over time absent a massive windfall that will enable the business to bounce back.

Will Your Business Succeed in the Future?

Chapter 11 bankruptcy only makes sense if you reasonably believe the business is truly viable in the long term. Because Chapter 11 allows a business to reorganize without shutting it down, it is important to be realistic in assessing the business’ performance and potential for future growth. If the business is simply not viable at its core, trying to keep it alive may not make sense, and dissolution of the company through Chapter 7 bankruptcy may be a better option.

Speak with an experienced business bankruptcy lawyer to determine which options are best for your business. This is particularly important if your business’ total secured and unsecured debts are less than $3,024,725, as the business may be eligible for a streamlined small business reorganization under Subchapter V of Chapter 11.

Do You Have a Plan of Reorganization?

For Chapter 11 bankruptcy, you need to have some sort of reorganization plan in mind. Perhaps the business needs to downsize to a smaller location with reduced costs and reject the former lease. Maybe you need to lay off employees to save money, or you need time to negotiate contracts with lenders and suppliers to avoid layoffs. You may want to sell certain equipment and supplies for a quick injection of cash. Whatever the case, you need to have some sort of plan for the business.

Chapter 11 can give the business some “breathing room” to implement its plan. Still, plans of reorganization have many moving parts, so it is important to discuss all aspects of the business’ reorganization with an experienced business bankruptcy lawyer to ensure the best possible chances of the plan being implemented successfully.

Can a Las Vegas Business Bankruptcy Lawyer Help Me?

A Las Vegas business bankruptcy lawyer can examine your unique situation and determine if Chapter 11 makes sense for your business. At Larson & Zirzow, our team includes a Board-Certified Business Bankruptcy Specialist — a distinction held by very few attorneys in Nevada. Let our experienced team of business bankruptcy lawyers guide help guide you through the process. Contact Larson & Zirzow today.

Sources:

whatnow.com/las-vegas/local-news/nevada-based-printing-company-faces-financial-struggles-files-for-chapter-11/

investopedia.com/terms/c/chapter11.asp

irs.gov/businesses/small-businesses-self-employed/chapter-11-bankruptcy-reorganization