Bankruptcy Options for Florida Family Businesses

Small, family-owned businesses are an important part of the South Florida economy, and many of them have been operating for decades. Indeed, many family-owned businesses have been in families for multiple generations, and it is important for the present owners to keep the businesses operational and in a healthy financial state. According to the Small Business Administration (SBA), small businesses in Florida employ approximately 3.5 million people, or nearly 42 percent of the private workforce. The largest number of small businesses in the state, including family-owned businesses, are in accommodation and food service industries, followed closely by health care, social assistance, construction, information technology, and retail trade. South Florida is the region with the highest number of small businesses in the state, with a significant proportion of sole proprietors and small partnerships.

When small businesses that are family owned begin to struggle financially, it is often especially important to find a way to keep these businesses afloat and profitable — for the business owners’ income, as well as for the family’s legacy. In many circumstances, bankruptcy may be an option. What types of bankruptcies are appropriate for small, family-owned businesses? Our West Palm Beach bankruptcy lawyers can tell you more about reorganization bankruptcy options.

Chapter 12 Bankruptcy 

Chapter 12 bankruptcy is a very specific type of reorganization bankruptcy that is only available to family farmers and family fishermen.

Subchapter V Bankruptcy

 For small family-owned businesses in South Florida, Subchapter V bankruptcy is may be a  good option. Subchapter V bankruptcy is a streamlined subchapter of Chapter 11 bankruptcy.

There are specific requirements for Subchapter V that you should discuss with a bankruptcy lawyer, including a debt threshold of $3,024,725.

Chapter 13 Bankruptcy

 If your family business is a sole proprietorship, you may be eligible to file for Chapter 13 bankruptcy, which is a type of reorganization bankruptcy for individuals or consumers rather than for businesses. Since sole proprietorships are not entities distinct from the sole proprietor or owner, the owner can file for Chapter 13 bankruptcy. The key thing to note, though, is that the sole proprietor’s personal finances will also be part of the bankruptcy case.

Traditional Chapter 11 Bankruptcy

 If your family-owned business is not eligible for Subchapter V, a traditional Chapter 11 bankruptcy is likely the best option for you.

We have not listed Chapter 7 bankruptcy since this type of bankruptcy would require a closure of your family business. However, Chapter 7 bankruptcy is an option if you have reached the point where a business liquidation may be the right decision. Our bankruptcy lawyers can help you to determine the right course of action for your business.

Contact Our West Palm Beach Bankruptcy Attorneys Today 

Do you have questions about filing for reorganization bankruptcy and keeping your family-owned business operational while restructuring debt? An experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can talk with you today to learn more about the structure and details of the business so that we can discuss your eligibility for different types of business bankruptcy in South Florida.

Sources:

advocacy.sba.gov/wp-content/uploads/2020/06/2020-Small-Business-Economic-Profile-FL.pdf

uscode.house.gov/view.xhtml?edition=prelim&path=/prelim@title11