Small Business Chapter 11 Bankruptcy

Small businesses that are facing financial difficulty may avoid liquidation by filing a Chapter 11 bankruptcy.  A Chapter 11 bankruptcy is a reorganization that allows the business to continue while repaying creditors a portion of the debts owed prior to the bankruptcy filing.  A reorganization is not for every business that is struggling, but under the recently updated Chapter 11 reorganization rules, a small business may now be able to afford to reorganize the business.  Chapter 11 may also be used by individuals who do not qualify for a Chapter 7 or 13 bankruptcy.

How does a Chapter 11 bankruptcy benefit small businesses?


Chapter 11 has been available to businesses for a long time, but recent updates that became effective on February 19, 2020 now streamline the Chapter 11 process and reduce the cost for viable small businesses that need to reduce debt payments to continue.  The Small Business provisions add a layer of rules to the normal Chapter 11 framework that eliminates the expense of the creditor's committee that is typically paid by the debtor.  

What businesses qualify for the special Small Business provisions under Chapter 11?


There are two requirements a debtor must satisfy to utilize the Small Business provisions. 


First, the debtor must be engaged in commercial or business activities with total non-contingent liquidated secured and unsecured debts of $2,566,050 or less.  The debtor must be a business other than primarily owning or operating real property.

Second, the trustee must not have appointed a creditor's committee for the debtor's case or the court has determined the creditors' committee is insufficiently active and representative to provide oversight of the debtor.  If there is no creditor's committee, the trustee provides oversight of the reorganization.

Take the first step towards financial recovery

If you are considering bankruptcy, contact Michigan bankruptcy attorney Andrew Steiger for a free consultation to discuss your options to reduce your debts and protect your assets.  Attorney Steiger will provide you with a free consultation to discuss your current financial situation and possible outcomes of a bankruptcy filing.  Steiger Tax Law is a debt relief agency helping people file bankruptcy under the United States Bankruptcy Code.  For more information, call 248-259-6367 or email Attorney Steiger at

© 2020 by Steiger Tax Law.  All Rights Reserved.  Steiger Tax Law is a debt relief agency helping people file bankruptcy under the United States Bankruptcy Code.  The firm is committed to helping clients file bankruptcy in the metro Detroit area, including Wayne, Macomb, Oakland, Monroe and Washtenaw counties.  Attorney Andrew Steiger serves clients in all cities in these areas including St. Clair Shores, Warren, Ann Arbor, Livonia, Detroit, Grosse Pointe, Clinton Township and Southfield.