Bankruptcy attorneys: Times are tough for small businesses, but options exist
Attorney Diane Tiveron was interviewed on how mandated closures due to the coronavirus pandemic have put some businesses in a bind. This article is for Business owners who are looking for guidance on legal options as well as what they can do to stave off creditors.
Fear for businesses has come in waves, said Diane Tiveron, managing partner at HoganWillig PLLC.
“At the very beginning, it was fear and questions on how to know whether to stay open or not,” she said. “We were trying to work through that and now I have clients who are trying to work through the opportunities that are available through the SBA.”
A plus in all of it for businesses is creditors currently don’t have much leverage, the attorneys said.
“That hammer that most creditors have of involving the court is on hold,” Tiveron said.
She added that there are only limited ways until the courts fully open where creditors can acquire or enforce a judgment.
Options for businesses when it comes to bankruptcy are reorganizations through a Chapter 11 filing or liquidation via a Chapter 7 proceeding.
During typical times, Tiveron said her goal is usually to talk businesses through what they can do. A Chapter 11 filing can be complex, while a Chapter 7 route ushers in finality.
“Bankruptcy is just not a good stopgap measure right now from my perspective,” she said. “I think I’m talking to enough businesses where there’s enough uncertainty (in proceeding that way) and there’s some possibility of some assistance or some loans that bankruptcy (in this becomes) taking care of a headache with a lobotomy.”
A newly-available option predated the COVID-19 ordeal but launched this year following 2019’s passage of the Small Business Reorganization Act. It offers a “better path” for businesses to restructure and rehabilitate their financial affairs effectively, according to the American Bankruptcy Institute which pushed for the bipartisan legislation.
Tiveron said she wasn’t aware if any businesses had utilized it yet in Western New York, but it could nonetheless be a route some could choose. Businesses are eligible so long as they have not accrued more than $2,725,625 in secured and unsecured debt as of their filing dates.
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