05.12.2015 | by Kenny Steinberg
Good enough for GM, good enough for you
Even after 35 years in my business, I am surprised how little people know about or consider using the United States Bankruptcy Code, specifically Chapter 11 or Chapter 13, to help out their small business. After all, large businesses use it all of the time to restructure their debt. So why not you?
I was thinking about this when I heard that General Motors, which filed for protection under Chapter 11 of the Bankruptcy Code several years ago, may not have to compensate people for
injuries caused by an ignition switch failure they knew about for years before they decided to do anything about it. The problem occurred years before GM filed for Chapter 11. Of course, to be fair, General Motors has voluntarily put aside $400 million for compensating the victims and their families.
The law behind this? In the simplest terms, if the debt had been incurred prior to the time General Motors filed for bankruptcy, that debt can be, let’s say, adjusted, according to the
Bankruptcy Code. By adjusted, I mean GM might only have to pay a percentage of the debt to the creditors to whom it owed money prior to the filing of its bankruptcy case. And
that percentage varies according to rules of the Bankruptcy Code; it could be high, or it could be, say, 1% or less.
What does this mean to you? Let’s say that due to unfortunate circumstances, your business has been down and you have fallen behind with payments to your creditors. Now, business has picked up a bit, or you can see it picking up in the future, or you are contemplating a restructuring of your business that will allow you to see light again. But because you owe so much debt from the past, it seems impossible for you to break out from this mountain of prior debt, and you can’t move forward.
That’s where we may be able to help at Steidl and Steinberg. We will work with you to see how the older debt can be restructured under Chapter 11 or Chapter 13. And with our help, you may finally be able to see the daylight that you haven’t seen in a while. The laws give you a lot of flexibility to deal with this debt: you might have tax debt that we can stretch out for as long as six years. You may wish to get out of your business lease and into a less expensive location, or maybe, by paying your creditors a percentage of their debt and/or paying the debt out over several years, you can make the business work like you always knew it would.
But unless you know what your options are, you won’t know the possibilities. So give Steidl and Steinberg a call to see what we can do for you.
It’s time to see the daylight again.