Connect with us

Business

Exorbitant bankruptcy costs hurt small businesses

Published

on

Even when small businesses would benefit from bankruptcy, the cost of filing for such protection is often cost-prohibitive, according to The Wall Street Journal.

Roughly 90 percent of companies that file for Chapter 11 bankruptcy have less than $10 million in debt and property, and their costs are at least $100,000 to $300,000 even if there are no disputes. Fears of losing the business and personal assets during the process keep most from even starting the process.

Recently, hearings in Washington with the Senate Judiciary subcommittee on Oversight, Agency Action, Federal Rights, and Federal Courts met to discuss the problems small business owners face as well as to propose changes that could be made to the law in the future to make the situation easier. One idea is to alter the filings to be more similar to the Chapter 13 process for consumers. In this case, the business owner might be able to keep their assets in exchange for repaying the debt over several years. Under the current system, debts must be repaid in full up front.

Even without changing the foundation of the Chapter 11 system, there are still many ways in which the costs to the filer can be lowered. Reducing the amount of information and paperwork that businesses are required to assemble and providing a financial professional to help navigate the process would save everyone both time and money. Another change could be eliminating the requirement for an unsecured creditors committee for every filer. This committee uses the bankrupt business’ money to hire lawyers and advisers to ensure that as much money as possible is going to creditors. This is a lengthy process that could be solved with simple mediation and arbitration.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Your Zombie Walk Shirt!

King Cartoons

Upcoming Events

Oct
17
Wed
4:00 pm Introduction to Watercolor @ Art in the Valley
Introduction to Watercolor @ Art in the Valley
Oct 17 @ 4:00 pm – 6:30 pm
Introduction to Watercolor @ Art in the Valley
This class provides a hands-on experience for painting with watercolors, and meets once a week for five weeks. Each week we will work to build a solid foundation in technique. Materials are provided, but feel[...]
Oct
18
Thu
6:00 pm Drawing Studio @ Art in the Valley
Drawing Studio @ Art in the Valley
Oct 18 @ 6:00 pm – 8:30 pm
Drawing Studio @ Art in the Valley
All drawing levels welcome. In this class we’ll work on creating drawings from still life, plaster casts, or reference photos. Learn and develop your abilities in composition, proportion, and rendering with artist and instructor Michael[...]
6:30 pm Learn how to save money with Sol... @ Marshall Community Center
Learn how to save money with Sol... @ Marshall Community Center
Oct 18 @ 6:30 pm – 8:30 pm
Learn how to save money with Solar Energy @ Marshall Community Center
Are you a resident of Clarke, Frederick, Fauquier, Loudoun, Rappanhannock, or Warren County who wants to go solar? Now’s your chance! Neighbors have formed the Upper Piedmont Solar Co-op with the help of Solar United[...]
Oct
20
Sat
8:00 am Front Royal Farmers Market @ Near the Gazebo at the Village Commons
Front Royal Farmers Market @ Near the Gazebo at the Village Commons
Oct 20 @ 8:00 am – 1:00 pm
Front Royal Farmers Market @ Near the Gazebo at the Village Commons
A Farmer’s Market like no other. Come visit us in Front Royal for a festive time. All domestic products produced by the seller!
10:00 am Pumpkin Patch Festival @ Riverton United Methodist Church
Pumpkin Patch Festival @ Riverton United Methodist Church
Oct 20 @ 10:00 am – 5:00 pm
Pumpkin Patch Festival @ Riverton United Methodist Church
Riverton Church (55 E. Strasburg Rd, Front Royal, VA 22630) | October 20-21 from 10am-5pm Free, please bring the whole family for this fun filled day!