Common misconceptions about bankruptcy and debtor-creditor relations can hold small businesses back. Successful reorganization is possible, especially with the help of experienced counsel. Hear from Attorney Allison R. Gladden on changes to the Chapter 11 process that can benefit smaller companies.
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“What should small businesses know about bankruptcy?”
Attorney Allison Gladden: Whether it's a small client or a large corporation. The issues are generally the same. It's all about finding a balance between what this person has and what this person wants from them.
Within the last decade, we've added a subchapter of Chapter 11 for small businesses because smaller companies were finding the requirements to confirm a reorganization plan so burdensome that they couldn't get out of Chapter 11, and then they would end up being liquidated. So we're now seeing small businesses that actually can reorganize, because that is a much more business friendly subchapter. It shortens the timelines, and it really gives them a chance to get something done.
They have the exclusive right to craft their plan. They can come in as a small business owner far more familiar with how their operations will or won't work and say, “this is how we can do it.” And I think having that control is allowing some of the small businesses to legitimately and successfully reorganize.