Depending on the type of business you operate here in Florida, your profits may be cyclical. Often, the profits made during the summer months at the height of the tourist season must carry the business through the leaner seasons.
That can be a tough go for some owners of fledgling Tampa businesses. Money can get really tight, and if the high season is dampened by a hurricane or three, it can be enough to put you from the black into the red.
While it certainly will never be your first debt-relief option, filing for a Chapter 11 bankruptcy reorganization can keep you afloat in dire financial straits.
Both individuals and businesses may file for bankruptcy under Chapter 11. One of the most notable filers under this chapter is our current president. While he never filed a personal bankruptcy as a private citizen in earlier years, President Trump filed for bankruptcy under Chapter 11 for several of his businesses.
After filing under Chapter 11, you will become a debtor-in-possession, as your business will retain its assets and continue operating. This status conveys most of the same responsibilities and rights as a bankruptcy trustee has.
However, as a debtor-in-possession, you will not have the right to compensation. Debtors-in-possession may file litigation to stop creditors from accessing money and can reject and accept contracts and seek and obtain loans to stay afloat.
Ultimately, however, it is the court that has final approval of the debtor's actions. The court (and any creditor) can seek a trustee to be appointed as a replacement for a debtor-in-possession when they conclude it to be in the best interest of the creditors and the bankruptcy estate. Such actions might be taken if a debtor-in-possession mismanages assets.
The best way to determine whether filing for a Chapter 11 bankruptcy is in your best interests (and that of your business) is to review your case with a Tampa bankruptcy law attorney.