With COVID-19 and the differing attempts by state and local government to contain its spread by various regulations, smaller companies in almost every industry have been negatively affected by state regulations. As a result, some companies impacted by these COVID-19 regulations may find themselves on the brink of insolvency.
Until recently, there have been two chapters of the bankruptcy code for the use of insolvent companies: Chapter 11 and Chapter 7. Chapter 11 was designed for the restructuring of companies that have a future business. Chapter 7 is designed for the liquidation of companies without a projected future due to market forces or excessive debt.
For a smaller company, the Chapter 11 process is often far too expensive. It re…
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