Bankruptcy Liquidation for Tampa Restaurant and Bar Owners
If you currently own a restaurant or bar in the Tampa Bay area and are struggling to keep your business solvent, you may be thinking about filing for bankruptcy. It is important for small business owners to understand the different forms of bankruptcy protection for which they may be eligible, and to understand the pros and cons of each. Generally speaking, restaurant and bar owners should be thinking about filing for either Chapter 11 bankruptcy or Chapter 7 bankruptcy. These two types of bankruptcy often have very different outcomes, however, including whether or not the restaurant will be able to continue operating in the future. In short, Chapter 11 bankruptcy allows small business owners to reorganize their debt, developing a repayment plan through which they can repay creditors and (in many cases) keep their restaurants and bars open.
What are the benefits of each, and how does bankruptcy liquidation come into play? To better understand which type of bankruptcy is right for you, you should consider the distinctions between bankruptcies that allow for reorganization versus liquidation. In addition, you should have a sense of some of the issues that business owners might face after filing for one of these forms of bankruptcy.
Pros and Cons of Liquidation: Key Differences Between Chapter 11 and Chapter 7 Bankruptcy
Generally speaking, many restaurant or bar owners in Tampa who are struggling to pay their business debts choose to file for Chapter 11 bankruptcy instead of Chapter 7 bankruptcy because they want to keep their restaurants open. Any small business owner who is considering bankruptcy should understand that Chapter 7 likely will not allow you to keep your business open, and it will require liquidation. As such, small business owners who want to avoid liquidation should think more carefully about whether Chapter 11 bankruptcy is right for them.
What do we mean when we talk about liquidation? In short, a bankruptcy trustee will be assigned to liquidate, or sell, all non-exempt property of the business if the debtor’s business has any assets remaining. Then, the proceeds made from the liquidation will be used to repay creditors in the manner determined appropriate by the bankruptcy court. The business owner will not have to deal with selling any property in order to repay his or her creditors. Instead, liquidation is a process with which bankruptcy trustees are very familiar, and business liquidations tend to be conducted in an orderly fashion.
Determining exempt business property can be complicated, and it is important to discuss your case with an experienced Tampa bankruptcy lawyer before you begin the process of filing for bankruptcy. While liquidations under Chapter 7 occur for both individuals and businesses, an experienced consumer advocate can help you to better understand which of your items must be sold in order to receive a discharge of your debts.
Converting from Chapter 11 to Chapter 7 Bankruptcy
One of the issues that Tampa Bay small business owners often face concerns conversion from Chapter 11 to Chapter 7 bankruptcy. For instance, Hillsborough County restaurant owner might decide to file for Chapter 11 bankruptcy in order to keep her restaurant open and to avoid liquidation. However, the restaurant owner might realize that she has far too many debt obligations—and not enough business income—to keep her restaurant open. As such, she might want to convert her case to a Chapter 7 bankruptcy. Can she do it? And will liquidation work the same way?
Bankruptcy judges can allow a small business owner to convert from a Chapter 11 bankruptcy to a Chapter 7 bankruptcy, provided that the debtor meets the requirements for a Chapter 7 filing. To be sure, a recent article in the Tampa Bay Business Journal reported on a local business that initially filed for Chapter 11 bankruptcy but then converted to Chapter 7, at which point its non-exempt assets were liquidated.
You should keep in mind that converting from Chapter 11 to Chapter 7 bankruptcy will result in a liquidation of assets just as if you had filed for Chapter 7 protection in the first place. If you are a small business owner and you have questions about filing for bankruptcy, an experienced bankruptcy lawyer in Tampa can help. Contact Tampa Law Advocates, P.A. for more information about how we can assist you.