You May Be Able To Dismiss Your Chapter 11 To Receive A PPP Loan

Posted on: 12 March 2021

When you are restructuring your business through bankruptcy, you will not be able to obtain a Paycheck Protection Program (PPP) loan. However, you might discover in the middle of bankruptcy that you will need a PPP loan to be able to save your business. The good news is that courts may dismiss bankruptcies to allow debtors to obtain these types of loans. 

How Chapter 11 Works

Chapter 11 is referred to as a reorganization bankruptcy. When you file for Chapter 7, your goal is to discharge your debts and liquidate your assets. You may do this when you are shutting down your business for good. However, if you intend to keep your business and simply wish for more favorable conditions regarding your liabilities, you may choose to file for Chapter 11.

With Chapter 11, you will enter into a debt repayment program. Unlike with other forms of bankruptcy, you will continue to remain in possession of your assets during the reorganization and will not need to appoint a case trustee, except in rare cases.

Bankruptcy Can Be Stalled

Your bankruptcy might need to be dismissed because you may not know what your business will look like after a major event such as a pandemic. Some businesses have been forced to turn to PPP loans that are offered by the Small Business Administration. 

When having the bankruptcy dismissed, the creditors might argue against this decision and claim that they will be hurt by the process. The courts are able to dismiss a bankruptcy at their own discretion "for cause." Therefore, your attorney will need to persuade the judge that they should dismiss your bankruptcy. 

The Grounds for Dismissing a Lawsuit

The judge will have grounds to dismiss your bankruptcy when you will experience substantial and continued loss and when there is very little option for rehabilitation. Under these circumstances, the creditors will need to prove that the dismissal of the bankruptcy will place an unusual level of burden on the creditors. 

Oftentimes, as long as you find yourself in a situation that is beyond your control, the courts are willing to assist you by dismissing a bankruptcy when the PPP loan is the only way that you will be able to continue operations. In the long-term, this may be more beneficial to all parties involved because you will be able to generate revenue that can later be used to pay off debts.

Contact a local bankruptcy attorney to learn more.


Child Support Enforcement Secrets: What You Should Know

If your ex was ordered to pay child support as part of your divorce settlement, you have every reason to expect it to be paid on time. If he or she isn't meeting that obligation in a timely manner, you do have some enforcement options. Instead of struggling to get by or finding yourself fighting with your ex about getting the payments you're entitled to, you should reach out to a child support attorney who can help you take the case back to court. Your ex will have to show just cause for why he or she isn't paying or the courts will order them to catch up. I created this site to share what I've learned about child support enforcement over the years. I hope it helps you to understand your rights and the options available to you.

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