Chapter 11 bankruptcy is often associated with large corporations restructuring their debts, but it can also be an option for smaller businesses and even individuals with significant financial obligations. At Frank & De La Guardia, we assist the Miami public with navigating complex bankruptcy law matters, including Chapter 11 filings. Below, we explore who qualifies for Chapter 11 bankruptcy and how it can be beneficial.

What Is Chapter 11 Bankruptcy?

Chapter 11 bankruptcy allows businesses and individuals to reorganize their debts while continuing operations or maintaining control of their assets. Unlike Chapter 7, which involves liquidating assets to pay off debts, Chapter 11 provides the opportunity to create a repayment plan over a more extended period.

Who Can Apply for Chapter 11 Bankruptcy?

1. Businesses of All Sizes

• Corporations and LLCs: Companies experiencing financial distress but wanting to stay in operation can apply. This includes retail stores, service-based companies, and other enterprises seeking to reorganize debt without ceasing operations.
• Partnerships: Partnerships facing financial difficulties can also benefit from Chapter 11, allowing them to restructure while preserving business operations.

1. Small Business Owners

• Small business owners, including sole proprietors, can file for Chapter 11 if they have debts that exceed the thresholds for Chapter 13. Recent changes under the Small Business Reorganization Act (Subchapter V) have made the process more accessible and cost-effective for qualifying small businesses.

1. Individuals with Substantial Debt

• While less common, individuals with significant personal debt may file for Chapter 11 bankruptcy, particularly if their debt levels exceed the limits set for Chapter 13 bankruptcy. High-income individuals, property owners, or those with complex financial situations often choose Chapter 11 as a flexible solution to restructure their debt.

Benefits of Chapter 11 Bankruptcy

• Flexible Repayment Plan: Debtors can propose a plan that reorganizes debts over an extended period, allowing them to stay operational while gradually repaying creditors.
• Continued Business Operations: Unlike Chapter 7, where business assets are liquidated, Chapter 11 enables companies to continue operations, preserving jobs and future business potential.
• Custom Solutions: Debtors can negotiate terms with creditors and structure plans that fit their unique circumstances.

Is Chapter 11 Right for You?

Chapter 11 can be an effective strategy for businesses and individuals seeking to regain financial stability without relinquishing control of their assets. However, the process can be complex and requires detailed planning and legal expertise.

How Frank & De La Guardia Can Help

At Frank & De La Guardia, our experienced attorneys guide clients through every step of the Chapter 11 process, from assessing eligibility to creating a comprehensive reorganization plan. We’re dedicated to helping Miami residents and businesses navigate the intricacies of bankruptcy law and achieve the best possible outcomes.