Struggling small business or personal guarantors of an SBA loan can take advantage of the new Chapter 11 Subchapter V bankruptcy procedures.
Book a Consultation CallThe new option for troubled SBA loans
The new Chapter 11 Subchapter V bankruptcy has many differences from a regular Chapter 11. For instance, some of the changes are as follows:
These changes will result in faster and thus less expensive reorganizations for small business.
As such, your small business may use the new Chapter 11 Subchapter V to reorganize in this current economic climate. The use of Subchapter V may be one route to keeping your business going.
Traditionally, regular Chapter 11 bankruptcies have been expensive and the success rate of a company or individual making it through the life of the bankruptcy plan was much less than 50%.
Therefore, struggling businesses whose main debt consists of an SBA loan may find the new Chapter 11 Subchapter V bankruptcy a potential option to rescue the business.
Individuals may avail themselves of new bankruptcy procedures as well as small businesses. Most importantly, it may provide you with the opportunity to modify your SBA related loan.
If as part of your SBA loan, you pledged your primary residence as collateral, neither Chapter 7 or Chapter 13 bankruptcy will likely help in the event of default. However, Chapter 11 Subchapter V may help.
For instance, a small business debtor's plan may modify the rights of a holder of a claim secured by the principal residence of the debtor if the new value received in connection with the granting of the security interest was:
Therefore, you could possibly use the Chapter 11 Subchapter V to save your house and modify the terms of repaying the loan if you pledged your house as collateral as part of your personal guarantee. You will, more than likely, not rid yourself of the lien. Preserving your home constitutes your goal with the new bankruptcy code. If you have no other options, you should explore the new bankruptcy option.
San Diego County residents and small business that may benefit from a bankruptcy should contact us for a consultation. Our attorneys can help you and your business.
Protect Law Group has proven, nationwide experience resolving SBA loan or Treasury collection cases for individual debtors. Our Firm Attorneys can resolve SBA loans in default through out-of-court negotiations, offers in compromise and structured workouts.
We also have extensive experience in the court room as well. If you have been sued by your SBA lender in state or federal court in San Diego, Orange and/or Los Angeles County and need litigation or bankruptcy assistance, call us now to discuss the specifcs of your case.
Owe more than $30,000? Contact Protect Law Group for a Case Evaluation or call us toll-free at 1-888-756-9969.
We can analyze your SBA debt or Treasury debt collection problems and advise you on potential solutions.
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Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) in the original amount of $150,000 for a Florida-based borrower. The loan, issued on June 4, 2020, was secured by business assets and potential personal liability through the SBA's Security Agreement.
Following the permanent closure of the business, we guided the client through the SBA’s Business Closure Review process and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the business collateral for $2,910 — satisfying the borrower’s obligations under the Security Agreement and eliminating any further enforcement risk against the pledged assets.
Client personally guaranteed SBA 7(a) loan balance of $58,000. The client received a notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings. We represented the client at the hearing and successfully defeated the AWG Order based on several legal and equitable grounds.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) default in the amount of $150,000 on behalf of Illinois-based client. After the business permanently closed due to the economic impacts of the pandemic, the owners faced potential personal liability if the business collateral was not liquidated properly under the SBA Security Agreement.
We guided the client through the SBA’s Business Closure Review process, prepared a comprehensive financial submission, and negotiated directly with the SBA to release the collateral securing the loan. The borrower satisfied their collateral obligations with a payment of $2,075, resolving the SBA’s security interest.
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