Running a small business is challenging—long hours, endless responsibilities, and financial risks that don’t always pay off. When debt starts piling up and financial pressures become unmanageable, you may need to face the difficult decision of whether to file for bankruptcy.
The good news is that filing bankruptcy doesn’t always mean it’s the end. With the right legal help, Chapter 11 bankruptcy can be a powerful strategy to help your business restructure debts, regain control, and stay open.
Let’s break down what Chapter 11 bankruptcy involves, how it works for small businesses, and why having the right legal team by your side makes all the difference.
Chapter 11 bankruptcy is a valuable option for small businesses struggling with debt because it’s designed to help them restructure debts while keeping their doors open. They can propose a debt reorganization plan that outlines how debts will be repaid over time, often with more favorable terms, creating a path toward financial stability.
Small businesses in particular can benefit from Chapter 11 bankruptcy because they usually qualify for a streamlined version of it under Subchapter 5.
Chapter 11 Subchapter V bankruptcy offers them:
The process begins with filing a petition in bankruptcy court, along with detailed financial documents, including income statements, balance sheets, and a list of creditors. An automatic stay immediately halts collection actions and provides temporary relief from creditors.
Within 90 days of filing (or as extended by the court), your business must submit a reorganization plan. This plan outlines how your company will operate and repay its debts while maintaining financial stability.
If your business files under Subchapter 5, the reorganization plan can be confirmed without a consenting creditor. This is a big benefit because only the court needs to approve the plan, whether or not creditors agree with its terms. If not under Subchapter V, the plan must be approved by creditors and confirmed by the court.
Once the court confirms the plan, your business must follow the agreed-upon terms, making payments to creditors as specified. The court oversees compliance to ensure your business adheres to its financial obligations.
As a business owner, you can’t legally file for bankruptcy on behalf of your business; you need an attorney to do it. This is partly because filing for Chapter 11 is a complex legal process that requires strategic planning and precise documentation.
But the help of a local small business bankruptcy lawyer goes far beyond just the filing portion of the bankruptcy process. An experienced lawyer is useful in many more steps, helping with:
Choosing the right legal representation is critical for a successful Chapter 11 case. When searching for small business bankruptcy lawyers near you, these are the qualities and capabilities we encourage you to look for:
If your business is facing financial distress, seeking legal help can make all the difference. At The Lane Law Firm, we’ve helped many Texas small businesses reorganize their debt, negotiate favorable repayment terms, and keep their doors open—we can help yours too.
Schedule a free, no-obligation consultation to get started.