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Most businesses operate with integrity and legitimacy to protect their reputation and the company in future transactions. Unfortunately, some enterprises engage in fraud at the expense of other businesses and individuals which causes some unfortunate suffering. If your business has suffered from fraudulent misrepresentations, fraudulent inducement, embezzlement, larceny, theft, conspiracy, bribery, or any other type of fraudulent or unlawful activity, a Miami fraud lawyer can help protect your company and give you the best chance of a favorable outcome.

What is Commercial Fraud Litigation?

Commercial fraud litigation involves any type of fraud suffered by a business or suffered by an individual that was defrauded by a business. Typically, fraud involves a misrepresentation that was reasonably relied upon, which causes someone to enter into a transaction or undertake some activity that causes damage to an individual or business. Companies and organizations engaging in business transactions are governed by certain laws that are intended to ensure business dealings are conducted in good faith and that misrepresentations are minimized. If you were involved in a transaction which resulted in losses stemming from a misstatement or misrepresentation of fact made during the course of the transaction you may have a claim for fraud under Florida law.

Types of Commercial Fraud Litigation A Miami Fraud Lawyer Can Help You With

When a business or individual has been victimized by another business or individual that engaged in unfair methods of competition or deceptive, unconscionable, or unfair acts or practices in the conduct of commerce or trade, fraud may have occurred, and you should consult with a Miami fraud lawyer to assess your rights. There are many different types of commercial fraud cases that are heard in Florida's business courts every year. Some of the most common types of disputes involving fraud are as follows:

Fraud In the Inducement

Fraud in the inducement involves making false or misleading statements to cause another party to enter into a binding agreement. To have a claim for fraudulent inducement, a party must be able to demonstrate that it relied on a false or misleading statement when deciding to enter into the contract. While "Integration" clauses in commercial contracts typically bar parties from citing pre-contract statements as a defense against enforcement, the fraudulent inducement doctrine provides an exception in appropriate cases.

Fraudulent Misrepresentation

Fraudulent misrepresentation claims are similar to fraudulent inducement claims, but they are not restricted to cases involving false and misleading statements made prior to contract execution. If a party to a contract makes a false or misleading statement in an effort to avoid an obligation to perform or being held in default, for example, then the counterparty can hire a Miami fraud lawyer to pursue a claim for damages or equitable remedies.

Negligent Misinterpretation

While fraudulent misrepresentation claims generally require evidence that the defrauding party knowingly made a false or misleading statement, knowledge of falsity is not necessarily required in all cases. Negligent misrepresentation claims are based not on a party's knowledge (or constructive knowledge), but rather on the party's breach of a duty of care to avoid material misstatements or omissions.

Fraudulent Transfers and Conveyances

Fraudulent transfers and conveyances can give rise to creditor claims in bankruptcy . Under the U.S. Bankruptcy Code, bankruptcy debtors (and debtors that are at risk for bankruptcy) are prohibited from conducting transactions that are intended to, or, in some cases, that have the effect of depriving creditors of opportunities to recover funds or other assets through the bankruptcy process. While it can be difficult to unwind fraudulent conveyances in some cases, our lawyers have significant experience helping creditors recover fraudulently transferred assets in Chapter 7 and Chapter 11 bankruptcies.

Deceptive and Unfair Trade Practices

State and federal laws prohibit businesses and individuals from engaging in deceptive and unfair trade practices. These practices can take a variety of forms, from false claims about the effectiveness of a company's products or services to misleading statements or omissions in a company's marketing materials. Generally, to give rise to a deceptive or unfair trade practices claim, a company's false or misleading statement or omission must be material to a consumer's or business's decision to do business with the company.

Consumer Fraud

Along with deceptive and unfair trade practices claims, we also represent companies in cases involving other allegations of consumer fraud. These allegations can take many different forms, and, given the potential for multi-plaintiff or class action litigation, companies must be prepared to defend against consumers' fraud claims by all means available. At Edelboim Lieberman Revah, we have significant experience defending companies against consumer fraud claims in Miami and across Florida.

Embezzlement, Larceny, and Civil Theft

We also have significant experience representing companies in cases involving allegations of embezzlement, larceny, and civil theft. These cases often present unique challenges, and time will often be of the essence. If your company is dealing with suspected embezzlement, larceny or civil theft, a Miami fraud lawyer at Edelboim Lieberman Revah can oversee a comprehensive and privileged internal investigation, and we can take all necessary legal action to protect your company and preserve its options for recovery.

Any type of commercial entity, business organization, or other company that has become the victim of fraudulent activity should immediately consult with a Miami fraud attorney to understand their rights and obligations.

Turn to a Miami Fraud Lawyer at Edelboim Lieberman Revah

Fraud can be devastating to individuals and businesses, which is why it is so important to work with a Miami fraud lawyer as soon as a fraud has been uncovered. At Edelboim Lieberman Revah, our seasoned Miami fraud attorneys can help you recover the damages you deserve and will always work in the best interests of you and your business. Call us today at (305) 768-9909 or fill out our online form to schedule a consultation and learn more about how we can help with your case.

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Miami Fraud Lawyer | Fraud Litigation | Edelboim Lieberman Revah

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Most businesses operate with integrity and legitimacy to protect their reputation and the company in future transactions. Unfortunately, some enterprises engage in fraud at the expense of other businesses and individuals which causes some unfortunate suffering.

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Litigating Contract Disputes for Plaintiffs and Defendants in South Florida

Every day, companies enter into contracts, from sales of goods and services to purchases and leases of equipment, commercial space, and real estate. Contract disputes can arise over the interpretation of terms and whether one side is performing its end of the bargain. At Edelboim Lieberman Revah, you'll find a team of experienced contract drafters and negotiators who understand how contract terms are meant to be interpreted and enforced. Our skills as contract drafters and background in commercial litigation make us perfectly situated to litigate and resolve breach of contract disputes. Bring your South Florida contract dispute to a Miami breach of contract lawyer at our firm, and let us chart a path to resolving your matter efficiently and effectively, with your rights protected and your goals achieved.

What Makes a Contract a Contract?

A contract is a legally enforceable agreement with rights and obligations for each contracting party. Certain elements must be present to make a contract valid; namely, there must be an offer, acceptance, consideration (exchange of value), and mutual assent. The contract must also be for a legal purpose, made by parties capable of contracting. Without all of these elements, a contract might not exist. Common law, case law, and specific statutes such as the Uniform Commercial Code (UCC) can govern whether any particular element is present and accounted for in a purported contract.

When a dispute arises over the validity or enforcement of a contract, courts will look at the document itself to determine the intent of the parties. A whole body of law exists surrounding the question of whether extrinsic evidence (parol evidence) from outside the contract can be received by the court in interpreting the contract. Also, some contracts might not be in writing at all. Again, centuries of contract law, statutes and court cases answer the question of when a contract may be oral or must be in writing, as well as whether the existence of a contract is implied by the conduct of the parties regardless of whether they expressly entered into an oral or written contract.

Material Breach

A contract is violated or breached when one party fails to perform an obligation it has under the contract. However, not every breach is necessarily "material." Generally speaking, a "material breach" is one that goes to the heart of the contract or defeats its purpose. A material breach by one party can excuse the other party from its own obligations to perform. When one party breaches and the other party declines to perform, whether the breach was material can be a central focus of the litigation.

Anticipatory Breach

One party to a contract should not be expected to perform when it knows the other party will not perform. When one party indicates, either by words or action, that it does not plan on fulfilling its obligations under the contract, this repudiation or anticipatory breach can relieve the other party of its duty to perform, even if that party would otherwise be the first to perform its end of the bargain. A central issue in breach of contract cases involving an anticipatory breach is whether the alleged repudiation was express or unconditional and justified the other party's nonperformance.

Damages for a Breach of Contract

Typically, a party harmed by a breach of contract can recover the actual damages or financial loss it has suffered. If the party suffered some special type of harm because of the breach, the party can recover those special or consequential damages as well.

If the nature of the contract is such that it would be difficult to determine the actual damages of a breach, the contract might include a liquidated damages provision, saying party A will pay party B x amount of dollars in liquidated damages in the event of a breach. Florida courts will uphold and enforce liquidated damages provisions if the court believes damages were truly hard to calculate and the amount of liquidated damages is reasonable.

If the subject matter of the contract is real property or a unique or special personal service, your Miami breach of contract lawyer may persuade the court to order specific performance as a remedy for the breach. In those cases, monetary damages are considered inadequate to make up for failure to complete the contract, so the court orders it be performed, such as by forcing the sale of property, for instance.

Options for Resolving Breach of Contract Claims

When you engage a Miami breach of contract lawyer at Edelboim Lieberman Revah, your lawyer won't necessarily take your case to court immediately. In many cases, there will be more advantageous-and less costly-options available. As legal counsel for clients facing contract disputes, we examine all possible pathways toward a favorable resolution, including:

Negotiation - Even when contracting parties are at odds, they will often share a common interest in finding an efficient resolution that allows them to move forward. When it is in our clients' best interests to negotiate, we use all available leverage to work toward a favorable outcome, whether that involves preserving the contractual relationship or allowing it to terminate.

Mediation - Many commercial contracts include mandatory mediation clauses. Even when mediation is not mandatory, it can serve as a cost-effective tool for resolving breach of contract disputes short of litigation. In mediation, the parties work with a neutral third party (a mediator) to target a mutually acceptable outcome. However, either party may choose to terminate the process at any time.

Arbitration - Unlike mediation, arbitration results in a binding resolution issued by a third-party neutral (in this case, an arbitrator). Many commercial contracts include mandatory arbitration clauses as well, and, even absent a mandatory arbitration clause, adversarial commercial parties will often benefit from pursuing arbitration rather than going to court.

Litigation - In some cases, litigation will be the best, if not the only, option. This could be the case if negotiations have broken down, if mediation has proven unsuccessful, or if one party needs to seek immediate relief in the courts. Whatever the case may be, if your company needs to take a contract dispute to court, it will need an experienced Miami breach of contract lawyer on its side.

Litigation involving breach of contract claims can arise under various other circumstances as well. For example, contracting parties may disagree over the enforceability of a mandatory arbitration or forum selection clause, or one party may need to go to court to enforce its arbitration award. At Edelboim Lieberman Revah, we handle all types of breach of contract litigation, and we work closely with our clients to pursue effective litigation strategies focused on achieving efficient and favorable results.

Additional Remedies for Breach of Contract

In addition to monetary damages and specific performance, various other remedies may be available in breach of contract litigation as well. In all cases, the key is to work with your company's Miami breach of contract lawyer to thoroughly evaluate the options and pursue the best remedy (or remedies) available in light of the circumstances at hand. Some examples of additional remedies companies may need to pursue in breach of contract litigation include:

Injunctive relief that prevents the counterparty from engaging in certain conduct (either on an emergency, temporary or permanent basis)

Voiding of the parties' contract based on fraudulent inducement or other grounds

Voiding or enforcement of specific contract provisions, such as mandatory arbitration and forum selection clauses

Payment of a party's legal fees incurred in connection with the breach of contract litigation

Let a Miami Breach of Contract Lawyer from Our Firm Manage All Aspects of Litigation

If you are being sued for breach of contract or believe another party you are contracting with has violated the terms of the agreement or does not intend to uphold its end of the bargain, act now to protect your rights and interests. Reach out to the South Florida contract dispute lawyers at Edelboim Lieberman Revah in Miami or Fort Lauderdale by calling 305-768-9909.

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Miami Breach of Contract Lawyer | Contract Dispute Attorneys

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Every day, companies enter into contracts, from sales of goods and services to purchases and leases of equipment, commercial space, and real estate. Contract disputes can arise over the interpretation of terms and whether one side is performing its end of the bargain.

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With a Growing Number of Businesses In Distress, Fla. Lawyers Are Looking at Alternatives to Bankruptcy Filings

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With a Growing Number of Businesses In Distress, Fla. Lawyers Are Looking at Alternatives to Bankruptcy Filings

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With a Growing Number of Businesses In Distress, Fla. Lawyers Are Looking at Alternatives to Bankruptcy Filings | Daily Business Review

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The commercial real estate market in particular is getting choppier, and practitioners are increasingly taking advantage of receiverships and assignment for benefit of creditors.

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2875 NE 191st Street, Penthouse One

Miami, Florida 33180

305-768-9909

https://elrolaw.com/

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Home > Commercial Litigation

Highly Skilled South Florida Business Litigation Law Firm

Conflicts can arise in business among partners, between shareholders and directors, with customers or competitors, suppliers or vendors, and in countless other ways. What is important is for companies to have a Miami commercial litigation attorney they work closely with and whom they can trust to protect their interests in any commercial dispute. Competent business lawyers evaluate every dispute strategically by exploring various options for resolution, weighing benefits and risks, and working with clients to understand their needs and goals, including resolving the current dispute efficiently and effectively, preserving long-term business relationships, maintaining the company's reputation and goodwill, and continuing to grow and thrive.

This is the approach we take at the Miami commercial litigation law firm of Edelboim Lieberman Revah. We work closely with our clients to identify their goals and formulate a strategy to achieve them. Our South Florida commercial litigation attorneys have achieved sustained success in debt collection, partnership and shareholder disputes, UCC sale of goods litigation, accounting and legal malpractice suits, and more. As solution-oriented and commercially-driven litigators, each Miami commercial litigation attorney at our firm knows how to litigate cases to create leverage and deliver results.

Call Edelboim Lieberman Revah for help with any commercial litigation matter in Miami or South Florida, including:

Contract Disputes

Our team of business lawyers includes practiced, experienced contract drafters and negotiators. We bring that experience to the table when it comes to enforcing, challenging or defending contracts in a breach of contract action or other contract dispute. We represent business owners in all manner of contract disputes with employees, customers, vendors, suppliers, distributors, manufacturers, and the countless other parties companies contract with every day as they work to run and grow their business.

Business Torts

Disputes can arise among competing businesses or other parties that aren't based on contract, but instead involve allegations of fraud, unfair competition, or deceptive trade practices. Litigation can result in extensive money damages that go beyond any economic loss actually suffered, as well as injunctions that can restrain a business from engaging in certain activities. Our Miami commercial litigation attorneys represent plaintiffs and defendants in business litigation involving alleged fraud or other unfair or deceptive business practices.

Commercial Collections

Collecting on accounts receivable is an essential activity for any business, but it must be approached thoughtfully and skillfully with a full understanding of applicable laws and processes. Both federal and Florida laws set out numerous rules companies must follow when engaging in collections, and legal violations can be costly and completely frustrate the legitimate and vital business purpose of collecting a valid debt. Edelboim Lieberman Revah takes a smart and strategic approach to collections, aggressively asserting your rights and protecting your interests while staying squarely within the bounds of applicable state and federal laws.

UCC Litigation

The Uniform Commercial Code is a large body of law governing a wide range of commercial activities, including the sale of goods (Article 2), negotiable instruments (Article 3), and secured transactions (Article 9). A thorough understanding of the UCC is necessary to interpret, challenge or enforce contracts and navigate litigation surrounding the sale or leasing of commercial goods or the granting of credit secured by personal property. Your Miami commercial litigation attorney will understand how to navigate the UCC and make it work in your favor, including litigation involving contracts with provisions provided or governed by the UCC.

Partnership and Shareholder Disputes

Partnerships run smoothly until they don't. Disagreements among the partners regarding how the company should be run can stall growth and even spell the demise of the business if not properly resolved. Similarly, disputes between shareholders and the officers and directors of a corporation can result in deadlocked voting that stymies the corporation, derivative lawsuits, and allegations of breach of fiduciary duty. Edelboim Lieberman Revah represents the interests of partners, managers, shareholders, and other parties involved in partnership or shareholder disputes in South Florida. Let us provide the strategic guidance and professional representation necessary to resolve your corporate matter.

Important Contract Terms in Commercial Litigation

In disputes involving commercial contracts, several terms of the parties' agreement have the potential to substantially impact both the process and the outcome. When evaluating your company's options at the outset of our engagement, a Miami commercial litigation attorney at Edelboim Lieberman Revah will carefully examine key terms such as:

Indemnification - Indemnification clauses shift liability for third-party claims. For example, if a wholesaler gets sued for selling an allegedly defective product, the wholesaler's contract with the manufacturer may include an indemnification clause that shifts liability to the manufacturer. Indemnification clauses are essential risk management tools, and they frequently play a central role in commercial litigation.

Insurance - Mandatory insurance clauses can have a significant impact on commercial litigation as well. If a company's liability is insured, this can drastically alter the nature of the litigation as well as the litigation-related costs and risks for both parties.

Remedies and Caps - If a commercial contract includes specific remedies (while excluding others) in the event of a dispute, this type of clause can also significantly impact any disputes between the parties. This is true whether the contract provides for liquidated damages or precludes a party from seeking specific performance. Liability caps can significantly impact contracting parties' litigation strategies as well.

Force Majeure - Force majeure clauses have gained renewed focus as a result of the COVID-19 pandemic. If a party's non-performance is excused due to force majeure (or if a party claims its non-performance is excused due to force majeure ), this can shift the landscape of the dispute entirely.

"Boilerplate" Contract Terms - While commercial parties often overlook the "boilerplate" clauses in their agreements during contract negotiations, these terms can have a substantial impact on litigation. This includes common terms such as mandatory mediation and arbitration clauses, forum selection clauses, and choice of law clauses.

Enforceability of Mandatory Mediation and Arbitration Clauses

Mediation and arbitration are forms of alternative dispute resolution (ADR) that offer options for resolving commercial disputes without going to court. Many commercial contracts require parties to pursue mediation, arbitration or both prior to pursuing litigation.

Generally, mandatory mediation and arbitration clauses in commercial contracts are enforceable. As a result, if your company is facing a dispute under a contract that includes a mandatory mediation or arbitration clause, there is a good chance that your company will need to comply. However, as certain types of disputes may not be covered, you will want to consult with an experienced Miami commercial litigation attorney to ensure that you have an accurate understanding of your company's contractual obligations before making any decisions about a dispute resolution strategy.

Enforceability of Forum Selection and Choice of Law Clauses

Forum selection and choice of law clauses in commercial contracts are generally enforceable as well. These clauses have the potential to drastically impact the outcome of a dispute, both by altering the governing legal principles and by increasing (or decreasing) the costs of pursuing claims or defenses. At Edelboim Lieberman Revah, we handle commercial disputes in Miami for local and out-of-state companies that are contractually bound to litigate their disputes in South Florida.

FAQs: Commercial Litigation in Miami

Is the Prevailing Party in Commercial Litigation Entitled to Attorneys' Fees?

In the United States, the default rule is that the prevailing party in commercial litigation is not entitled to attorneys' fees from the losing party. However, this too can be altered by the parties' agreement. If a commercial contract includes a provision that entitles the prevailing party to attorneys' fees in the event of a dispute, this type of clause will generally be enforced. With that said, what it means to "prevail" in litigation can be open to interpretation (particularly when a case involves multiple claims and counterclaims), and it is not uncommon for commercial parties to disagree over the effect of a contractual attorneys' fees provision.

Is There a Benefit to Mediation or Arbitration if it Isn't Mandatory?

Yes, pursuing mediation or arbitration can prove beneficial in many commercial disputes. Broadly speaking, two of the primary benefits of mediation and arbitration are privacy and efficiency. If both companies involved in a dispute wish to keep the underlying issues out of the public eye, then they may share a mutual interest in not going to court. Mediation and arbitration are also generally less resource-intensive than litigation, although whether this outweighs the benefits of utilizing the judicial system will depend on the specific circumstances at hand.

Are There Grounds to Void a Commercial Contract?

While courts will generally uphold arm's length transactions in the commercial context, there are grounds to void commercial contracts in appropriate cases. Fraud in the inducement is one example. Even if a contract is not void or voidable in its entirety, contracting parties may be able to challenge specific clauses based on their vagueness, public policy considerations, or specific provisions under the governing law.

What if My Company Agreed to a Waiver or Covenant Not to Sue?

Waivers and covenants not to sue in commercial contracts are also generally enforceable. These types of clauses are important risk management tools, and they are essential to certain types and lines of business. If your company is dealing with a waiver or covenant not to sue, or if your company needs to enforce one of these clauses in connection with a dispute, we encourage you to speak with a Miami commercial litigation attorney at Edelboim Lieberman Revah.

What Should I Do if My Company is Being Sued?

If your company is being sued, you will want to speak with a Miami commercial litigation attorney promptly. Not only do you need to ensure that you are making informed decisions on your company's behalf, but taking swift action can often greatly reduce the time, costs and risks involved in commercial disputes in many cases. When you contact Edelboim Lieberman Revah, we will make arrangements for you to speak with one of our attorneys in confidence as soon as possible, and we will help you determine the best course of action to protect your company and its shareholders.

Let a Miami Commercial Litigation Attorney Manage Your Claims

Get yourself out in front of any current, pending or potential business dispute by contacting a team of Miami commercial litigation attorneys with the skills and experience to give you the practical advice and strategic representation you need to protect your rights and win. Call Edelboim Lieberman Revah in Miami or Fort Lauderdale at 305-768-9909.

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Miami Commercial Litigation Attorney - Edelboim Lieberman Revah

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Home > Commercial Litigation Conflicts can arise in business among partners, between shareholders and directors, with customers or competitors, suppliers or vendors, and in countless other ways. What is important is for companies to have a Miami commercial litigation attorney they work closely with and whom they can trust to protect their interests in any commercial dispute.

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Helping Business Owners Succeed Throughout South Florida

Our Miami Chapter 11 bankruptcy lawyers understand that bankruptcy isn't anybody's first choice, and it isn't anything business owners look forward to or anticipate when they are starting out. At the same time, bankruptcy isn't a dirty word, and it doesn't spell doom or the end for a struggling enterprise. When Chapter 11 works as it should, companies exit bankruptcy leaner, stronger and more efficient than before, ready to take on the competition and become a profitable leader in the industry.

Chapter 11 is a voluntary, strategic decision made by business owners facing significant debt and financial troubles. In South Florida, the bankruptcy litigation attorneys at Edelboim Lieberman Revah in Miami and Fort Lauderdale work with you to develop a plan that helps you achieve your goals. Our experienced Chapter 11 lawyers can create a plan with you that is fair and equitable, considers the interests of your creditors and is as good or better for them than a Chapter 7 liquidation bankruptcy, is feasible and is developed in good faith. A Chapter 11 plan with these features is likely to meet your needs and be approved (confirmed) by the bankruptcy court.

Chapter 11 bankruptcy is a complex procedure, and not all Chapter 11s succeed. Choose a law firm with a record of sustained success in successfully reorganizing under Chapter 11. In Miami and South Florida, choose Edelboim Lieberman Revah to guide you and assist you through the Chapter 11 process.

Should Your Company File for a Chapter 11 Bankruptcy?

While filing for bankruptcy under Chapter 11 affords a variety of benefits under the right circumstances, it isn't right for all companies. So, should your company hire a Miami Chapter 11 bankruptcy lawyer ?

Here is a non-exclusive list of factors that company leaders should consider when deciding whether to pursue a business bankruptcy under Chapter 11:

1. Will a Chapter 11 Filing Make Your Business Sustainable?

Generally speaking, the purpose of filing for bankruptcy under Chapter 11 is to secure relief from unmanageable payment obligations. It does not eliminate the company's debt. So, if your company can remain operational-and ideally grow-with a reorganized payment plan, then filing under Chapter 11 may be a good option. However, if reorganizing your company's debts is not likely to lead to sustainability, then it may not make sense to pursue a Chapter 11 bankruptcy.

2. Does It Make Sense to Keep the Business Afloat?

Even if a Chapter 11 bankruptcy may provide a path to sustainability, does it make sense to keep the business afloat? Or is reorganizing the business's debts a temporary solution to a bigger problem? Are you still passionate about making the business succeed? Before investing time and money in a Chapter 11 bankruptcy petition, it is important to thoughtfully consider these types of questions.

3. Are There Other (More Desirable) Options Available?

It is also important to consider whether your company may have more desirable options available. For example, if reorganizing your company's debts isn't likely to lead to long-term stability and growth, then it may be time to consider a Chapter 7 liquidation instead. Alternatively, renegotiating some (or all) of your company's liabilities outside of the formal bankruptcy process could offer a more efficient solution. There are a variety of other options as well-all of which may make more or less sense depending on your company's current financial circumstances and your business goals.

4. Are You Prepared to Deal with the Rules and Requirements of Chapter 11?

Filing for business bankruptcy under Chapter 11 is a process, not an event. After filing for bankruptcy under Chapter 11, companies and their owners must work through the process, seeking court approval as necessary. While a Miami Chapter 11 bankruptcy lawyer will be able to handle much of the process for you, you will play an integral role in the process as well.

5. Is Filing for Bankruptcy Under Chapter 11 Your Company's Best Option?

Ultimately, taking all relevant factors into consideration, you need to determine if filing for bankruptcy under Chapter 11 is your company's best option. If it is, then moving forward promptly will allow your company to get back on the solid financial ground as soon as possible. If it isn't, then investing in a Chapter 11 bankruptcy petition could mean throwing good money after bad. To make an informed decision, you will want to carefully evaluate of your options with an experienced Miami Chapter 11 bankruptcy lawyer.

Filing Chapter 11 Invokes the "Automatic Stay"

One of the most powerful tools for the bankruptcy filer is the "automatic stay" which goes into effect when the Chapter 11 petition is filed with the court. This provision puts the company's creditors on notice that a bankruptcy is underway and puts an immediate stop to all collection efforts, from phone calls and demand letters to civil lawsuits, collection of judgments, or lien foreclosures. The automatic stay provides immediate relief to the business owners, giving them the breathing room they need to step back and formulate a strategic, reasonable plan for dealing with their debt and business financial issues.

Chapter 11 Lets You Restructure and Reorganize

While the automatic stay is in place, you can negotiate with your creditors for more favorable terms. Most often, your creditors would rather see you succeed and pay off your debt to them or continue your business relationship rather than watch you go under while they possibly lose their ability to collect on the debt or do future business. Some debts can also be adjusted or discharged (eliminated) as part of the Chapter 11 process.

Chapter 11 allows you wide latitude to develop and adopt a plan that will lead you out of debt and onward to profitability. Your Miami Chapter 11 bankruptcy lawyer will outline how you might sell assets, raise additional capital from outside investors or lenders, or reorganize your business, such as cutting costs and streamlining operations.

Chapter 11 Leaves You in Charge

Except in cases involving evident fraud or gross mismanagement, the court in a Chapter 11 proceeding does not appoint a bankruptcy trustee to take over running the business. Instead, the business owner continues to manage operations and run the business as the "debtor in possession" while the plan of reorganization is being developed and submitted to the court for confirmation.

The court still maintains the supervision, and some major decisions must be approved by the court before they can be undertaken. These may include selling assets, entering into new leases, securing new mortgages or financing, modifying contracts, or shutting down or expanding operations. Subject to these conditions, the business owner can continue overseeing the daily running of the business, maintaining contacts and goodwill with company employees, customers, and vendors.

Build Back Your Business Better Than Before With the Help of an Experienced Miami Chapter 11 Bankruptcy Lawyer

To find out if Chapter 11 is the best move for your South Florida business, call Edelboim Lieberman Revah in Miami and Fort Lauderdale at 305-768-9909 to speak with one of our experienced and successful business bankruptcy attorneys. Your initial consultation is confidential and free.

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Miami Chapter 11 Bankruptcy Lawyer | Business Bankruptcy

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Our Miami Chapter 11 bankruptcy lawyers understand that bankruptcy isn't anybody's first choice, and it isn't anything business owners look forward to or anticipate when they are starting out. At the same time, bankruptcy isn't a dirty word, and it doesn't spell doom or the end for a struggling enterprise.

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Helping South Florida Business Exit Gracefully and Make a Fresh Start

Chapter 7 of the U.S. Bankruptcy Code applies to both consumer bankruptcies and business bankruptcies. Individuals and families, as well as corporations, partnerships, LLCs and sole proprietorships, can benefit from Chapter 7 and make a fresh start with a clean slate, free from overly burdensome debt.

The South Florida business bankruptcy lawyers at Edelboim Lieberman Revah in Miami and Fort Lauderdale can help you take advantage of the significant debtor protections Chapter 7 offers, including the automatic stay provision which puts an immediate stop to creditor harassment and all forms of collections, including lawsuits, judgments, liens, wage garnishments, foreclosures and repossessions. While the automatic stay is in place, Chapter 7 filers move forward through a process that eliminates (discharges) their unsecured debt so they can move out from under a mountain of debt and move on with their lives.

Chapter 7 for Individuals

A Chapter 7 consumer bankruptcy is open to individuals whose income level is below the state median for their household size or who qualify based on a means test that analyzes their income and expenses. The means test, however, does not apply to individuals who have debts that are primarily business debts. In their petition, Chapter 7 filers will list out their assets, income, monthly expenses, debts, exempt property, property sold or given away two years before the filing of the petition, and property owned and money spent during the preceding two years from the date of the filing of the petition.

The bankruptcy trustee is authorized to take the debtor's non-exempt property and sell it to pay off creditors. Once this property has been disposed of, any remaining unsecured debts are discharged, meaning the debtor is no longer responsible for paying them. Thanks to the many generous exemptions available under Florida law, an experienced Chapter 7 bankruptcy attorney can file a no-asset bankruptcy in most cases, meaning the consumer gets all their unsecured debts discharged without having to lose any property to the bankruptcy trustee.

Chapter 7 for Businesses

A business enterprise that files for Chapter 7 bankruptcy is usually closing up shop and chooses Chapter 7 as an orderly means of doing so. Companies that want to stay in business but are struggling with insolvency might choose Chapter 11 instead. Through Chapter 7, the bankruptcy trustee liquidates the company's assets to pay off creditors. Chapter 7 can therefore be ideal for a struggling business with few assets but many debts and can help businesses avoid creditor harassment and lawsuits.

Should I file for Chapter 7?

Entrepreneurs are optimists by nature, and even when facing difficult times might be thinking of borrowing more money to cure their troubles or filing a Chapter 11 bankruptcy to reorganize their debt. But an infusion of cash is not always a magic bullet to the various issues a struggling business might be facing. Chapter 11, meanwhile, is complex and expensive.

Closing the business might make the most sense, and Chapter 7 is often the most logical and practical way to do so cleanly and efficiently, without lingering liability. An alternative is to try and negotiate resolutions with each individual creditor without filing for bankruptcy. An experienced business bankruptcy and commercial lawyer can sit down with you and analyze your situation, advise you of your options and help you craft the best path forward.

5 Factors to Consider When Evaluating a Chapter 7 Business Bankruptcy Filing

If your business is struggling and you are contemplating a bankruptcy filing, there are several factors to consider before committing to a Chapter 7 petition. When you schedule an appointment with a Miami Chapter 7 bankruptcy attorney at Edelboim Lieberman Revah, your attorney will help you carefully evaluate factors such as:

1. Do You Qualify to File for Bankruptcy Under Chapter 7?

Since filing for bankruptcy under Chapter 7 absolves debtors of their liabilities and leaves creditors with less than the full amount they are owed, it is not an option in all circumstances. As a result, before you consider any other factors, you will want to determine if you or your business is eligible to file under Chapter 7. Your Miami Chapter 7 bankruptcy attorney can walk you through the eligibility criteria and reach an informed decision.

2. Are You Prepared to Shut Down Your Business?

As noted above, filing for bankruptcy under Chapter 7 typically results in the business shutting down. Are you prepared to close your business, or do you want to do what you can to keep it going? From a financial perspective, does it make sense to keep the business going? Ultimately, whether to file for bankruptcy under Chapter 7 is a business decision that requires a practical and pragmatic assessment of all relevant facts and circumstances.

3. Are There Options You Haven't Considered?

While filing for bankruptcy under Chapter 7 is one option for many struggling small businesses, it isn't the option that is available. Our attorneys can also help you evaluate options such as seeking additional financing, reorganizing your company's debts under Chapter 11, or pursuing an assignment for the benefit of creditors. It may also be possible to renegotiate some of your business's contracts to secure more-favorable terms; and, if your business has substantial tax debt, it may be possible to establish a payment plan or negotiate an offer in compromise. These are all options a Miami Chapter 7 bankruptcy attorney at Edelboim Lieberman Revah can help you evaluate as well.

4. Will a Chapter 7 Bankruptcy Filing Achieve Your Goals?

Although a Chapter 7 bankruptcy filing eliminates most debts for individual filers, business filings under Chapter 7 can still leave the company's owners saddled with liabilities. Additionally, if you are seeking to reorganize or reduce your company's debts instead of closing the business entirely, then filing under Chapter 7 likely is not your best option. Before you do anything, you need to make sure your chosen course of action will serve your goals.

5. Will a Chapter 7 Bankruptcy Filing Interfere with Your Ambitions?

Likewise, it is important to ensure that filing for bankruptcy under Chapter 7 will not interfere with your entrepreneurial ambitions going forward. While filing for bankruptcy offers a fresh start in many respects, it is not without consequences. By working with an experienced Miami Chapter 7 bankruptcy attorney, you can ensure that you do not unknowingly foreclose any opportunities to start again.

Help With Chapter 7 Bankruptcy Questions in Miami and South Florida

Bankruptcy is the start of a new chapter as much as it is the close of an old one. Many of the nation's current and historical biggest successes failed in one or more businesses before they had one that succeeded and exceeded all expectations. As a business owner, you can learn from your experiences good and bad. Chapter 7 bankruptcy can help you live to fight another day. Edelboim Lieberman Revah provides the assistance you need to get you there.

For practical advice, technical assistance and professional representation in a South Florida Chapter 7 business bankruptcy, call Edelboim Lieberman Revah in Miami or Fort Lauderdale at 305-768-9909 for a free consultation.

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Miami Chapter 7 Attorneys | South Florida Business Bankruptcy Lawyers

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Chapter 7 of the U.S. Bankruptcy Code applies to both consumer bankruptcies and business bankruptcies. Individuals and families, as well as corporations, partnerships, LLCs and sole proprietorships, can benefit from Chapter 7 and make a fresh start with a clean slate, free from overly burdensome debt.

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Miami Bankruptcy Litigation Attorney | Business Bankruptcy

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Miami, FL business bankruptcy attorneys Edelboim Lieberman Revah handle Chapter 7, Chapter 11, adversary proceedings & assignments for the benefit of creditors.

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Teamsters union pushes for US bankruptcy reform after Yellow's collapse

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Teamsters union pushes for US bankruptcy reform after Yellow's collapse

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NEW YORK, Aug 8 (Reuters) - The International Brotherhood of Teamsters on Tuesday called for changes to U.S. bankruptcy laws following the Chapter 11 filing of freight trucking company Yellow Corp (YELL.O), saying that workers must not be "left behind" when big businesses fail.

The Teamsters union said 22,000 of its members were out of work despite making significant concessions on wages and pension benefits in labor negotiations with the nearly 100-year-old company, which filed for bankruptcy on Sunday.

Yellow has blamed the Teamsters' opposition to its internal reorganization efforts for its collapse. But the Teamsters said its members had sacrificed more than $5 billion in wage and benefit concessions since 2009 to keep Yellow moving.

The union warned that the bankruptcy could mean they will not receive bargained-for retirement benefits or severance pay.

"Corporate bankruptcy legislation in the U.S. is a joke," Teamsters General President Sean O'Brien said in a statement. "Hardworking people routinely get left behind in this process when they should be at the front of the line to be paid and protected for the sacrifices they make to American employers."

Yellow did not immediately respond to a request for comment.

The union argued that U.S. bankruptcy law should be reformed to protect collecting bargaining agreements and worker retirement plans, which can be terminated by a bankrupt company or by a new buyer who acquires a company out of bankruptcy.

The union cited legislation last introduced in 2020 by two Congressional Democrats, Senator Dick Durbin of Illinois and Representative Jerry Nadler of New York, as an example of the kind of legislation it would support.

That legislation, the Protecting Employees and Retirees in Business Bankruptcies Act, would have prioritized payment for certain employee wage and retirement claims and it would have made it more difficult for bankrupt employers to terminate pension plans and collective bargaining agreements.

The bill passed a House committee but was not enacted into law.

U.S. bankruptcy law currently prioritizes repayment of up to $15,150 in wages per employee, according to bankruptcy attorney George Singer, who is not involved in Yellow's case.

But a law that forces debtors to honor existing collective bargaining agreements and retirement plans could conflict with other fundamental goals of bankruptcy, like giving debtors a fresh start or ensuring that losses are shared by similarly-situated creditors, Singer said.

Yellow's bankruptcy also carries risk for U.S. taxpayers, who could be on the hook if the company is unable to repay a $700 million government loan.

Yellow executives have said they intend to fully repay a bailout loan issued by former President Donald Trump's administration in 2020, but that will depend on the company's success in selling properties and roughly 12,000 trucks.

The U.S. government also faces losses on its nearly 31% ownership stake in Yellow, which it received as additional security for the loan. Shareholders are often last to recover their investments.

Yellow stock traded at $3.08 per share late Tuesday, up from $2.48 at the start of the day.

Reporting by Dietrich Knauth; Editing by Jamie Freed

Our Standards: The Thomson Reuters Trust Principles.

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Teamsters union pushes for US bankruptcy reform after Yellow's collapse

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The International Brotherhood of Teamsters on Tuesday called for changes to U.S. bankruptcy laws following the Chapter 11 filing of freight trucking company Yellow Corp , saying that workers must not be "left behind" when big businesses fail.

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Corporate Bankruptcy: How It Works, What It Means for Investors

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Corporate Bankruptcy: How It Works, What It Means for Investors

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If a company you've invested in files for bankruptcy, whether or not you get your money back depends on a number of factors, including the type of bankruptcy and the type of investment you hold.

Key Takeaways

Types of Corporate Bankruptcy

The type of bankruptcy proceedings-Chapter 7 or Chapter 11-generally provides some clue as to whether the average investor will get back all, a portion, or none of their financial stake. But even that will vary on a case-by-case basis. There is also a pecking order of creditors and investors, which dictates who gets paid back first, second, and last (if at all). In this article, we'll explain what happens when a public company files for protection under Chapter 7 or Chapter 11 and how that affects its investors.

Under Chapter 7 of the U.S. Bankruptcy Code, "the company stops all operations and goes completely out of business. A trustee is appointed to liquidate (sell) the company's assets, and the money is used to pay off debt," the U.S. Securities and Exchange Commission notes. An entity known as the stalking horse will enter a low bid for the available assets, forming a floor for bids from other buyers.

But not all debts are treated the same. Not surprisingly, the investors or creditors who signed up for the least risk are paid first. For example, investors who hold the bankrupt concern's corporate bonds have a relatively reduced exposure to loss: They had already forgone the potential of participating in any excess profits from the company (as they would have had they bought its stock), in return for the safety of regular, specified interest payments on their bonds.

Stockholders, however, have the potential to reap their share of a company's profits, as reflected in a rising share price. But in return for the possibility of greater returns, they take the risk that the stock might instead lose value. As such, in the case of a Chapter 7 bankruptcy, stockholders may not be fully compensated for the value of their shares. In light of this risk-return tradeoff, it seems fair (and logical) that shareholders are second in line to bondholders when bankruptcy takes place.

Secured creditors assume even less risk than bondholders. They accept very low interest rates in exchange for the added safety of corporate assets being pledged against corporate obligations. Therefore, when a company goes under, its secured creditors are paid back before any regular bondholders begin to see their share of what's left. This principle is referred to as absolute priority.

In a Chapter 11 bankruptcy, the company doesn't go out of business but is allowed to reorganize. A company filing Chapter 11 hopes to return to normal business operations and sound financial health in the future. This type of bankruptcy is generally filed by corporations that need time to restructure debt that has become unmanageable.

Chapter 11 allows the company a fresh start, but it must still fulfill its obligations under the reorganization plan. A Chapter 11 reorganization is the most complex and, generally, the most expensive of all bankruptcy proceedings. It is therefore undertaken only after a company has carefully considered all the alternatives.

Public companies tend to file under Chapter 11 rather than Chapter 7 because it allows them to continue to run their businesses and participate the bankruptcy process. Rather than simply turning over its assets to a trustee for liquidation, as it would have to in Chapter 7, a company entering Chapter 11 has the opportunity to retool its financial framework and, ideally, return to profitability. If the process fails, all of the company's assets are liquidated and stakeholders are paid off according to absolute priority, as described above.

When a company files for Chapter 11, it is assigned a committee that represents the interests of creditors and stockholders. This committee works with the company to develop a plan to reorganize the business and get it out of debt, reshaping it into a profitable entity. Shareholders may be given a vote on the plan, but that is never guaranteed. If no suitable reorganization plan can be devised by the committee and confirmed by the courts, shareholders may not be able to stop the company's assets from being sold off to pay creditors.

In one of the more dramatic examples of corporate bankruptcy in recent years, the failed cryptocurrency exchange FTX filed for Chapter 11 bankruptcy protection in November 2022.

How Bankruptcy Affects Investors

When a company begins bankruptcy proceedings, its stocks and bonds usually continue trading, albeit at extremely low prices. Generally, if you are a shareholder, you will see a substantial decline in the value of your shares in the time leading up to the company's bankruptcy declaration. Bonds for near-bankrupt companies are usually rated as junk.

Once the company goes bankrupt, there is a very good chance you will not get back the full value of your investment. In fact, there is a strong possibility that you won't get anything back at all.

During Chapter 11 bankruptcy, as the SEC summarizes, "bondholders will stop receiving interest and principal payments, and stockholders will stop receiving dividends. If you are a bondholder, you may receive new stock in exchange for your bonds, new bonds, or a combination of stock and bonds. If you are a stockholder, the trustee may ask you to send back your old stock in exchange for new shares in the reorganized company. The new shares may be fewer in number and may be worth less than your old shares. The reorganization plan will spell out your rights as an investor, and what you can expect to receive, if anything, from the company."

Basically, once a company files under any type of bankruptcy protection, your rights as an investor change to reflect the bankrupt status of the company. While some companies do indeed make successful comebacks after undergoing restructuring, many others don't. And if your stake in the pre-Chapter 11 company ends up being worth anything in the restructured firm, chances are it won't be as much as it used to be.

During a Chapter 7 bankruptcy, investors are even lower on the ladder. Usually, the stock of a company undergoing Chapter 7 proceedings becomes worthless and investors just lose their money. If you hold a bond, you might receive a fraction of its face value. What you'll receive depends on the amount of assets available for distribution and where your investment ranks on the priority list.

Secured creditors have the best chance of recouping the value of their initial investments. Unsecured creditors must wait until secured creditors have been adequately compensated before they receive any compensation. Stockholders usually receive little, if anything.

How Many Types of Bankruptcy Are There?

There are six types of bankruptcy in the United States Bankruptcy Code: Chapters 7, 9, 11, 12, 13, and 15.

What Type of Bankruptcy is for Individuals?

Individuals typically file either Chapter 7 or Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, most of the person's assets will be liquidated to pay creditors. In a Chapter 13 bankruptcy, the person will be allowed to retain more of their assets but must agree to repay their creditors over a certain period of time.

What Is Preferred Stock?

Preferred stock is a special type of stock that some companies issue. In the event of a bankruptcy, holders of preferred stock holders have a greater claim on the company's assets than the holders of common stock, but less of a claim than its bondholders.

The Bottom Line

From an investor's point of view, there isn't much good to say about bankruptcy. No matter what type of investment you made in a company, once it goes bankrupt you are probably going to get less for your investment than you expected.

In general, Chapter 11 is better for investors than Chapter 7. But in either case, don't expect much. Relatively few companies undergoing Chapter 11 proceedings become profitable again after a reorganization; even if they do, it is rarely a quick process. As an investor, you should react to a company's bankruptcy the same way you would if its shares took an unexpected dive for other reasons: Recognize the dramatically reduced prospects of the company and ask yourself whether you still want to be involved with it.

If the answer is no, it might be best to let go of your failed investment. Holding on while the company undergoes bankruptcy proceedings may only lead to sleepless nights and perhaps even greater losses in the future. If nothing else, you may be able to take a capital loss on your taxes.

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Corporate Bankruptcy: How It Works, What It Means for Investors

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When company files for Chapter 7 or Chapter 11 bankruptcy, investors may receive little or nothing, depending on their type of investment.

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The Complex Business Litigation Division was created in 2006 to address the overwhelming number of complex business cases filed in the Eleventh Judicial Circuit. The purpose of the division is to promote the orderly and efficient disposition of complex business matters. The Division has a dedicated Judge, support staff, case manager, court clerk and legal staff.

The Complex Business Litigation Rules and Procedures are applicable to all litigants and are used to facilitate the efficient and effective presentation of matters to the Court, particularly requiring that parties meet and confer prior to presenting issues to the Court. The Court's Administrative Order 17-11 sets forth the applicable general information of matters that qualify to be heard by the Complex Business Litigation Division, those that may be assigned to the Division and those which may not. Parties are required to follow the Division rules on all matters including transfers of cases to and from the Division after the initial filing.

The Complex Business Litigation Rules are accessible through this web page, together with the Administrative Order currently in effect.

The Division Rules are designed to facilitate the proceedings in these cases by promoting easy transmission and access to case information by the court, litigants, counsel and the public and to facilitate the effective presentation of evidence in the courtroom. The division judges provide active and hands-on participation in all matters. The procedures shall be construed and enforced to avoid technical delay, encourage civility, permit just and prompt determination of all proceedings, and promote the efficient administration of justice.

The Division also handles all Assignment for Benefit of Creditor cases.

Presiding judges over Complex Business Litigation cases are:

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The Complex Business Litigation Division was created in 2006 to address the overwhelming number of complex business cases filed in the Eleventh Judicial Circuit. The purpose of the division is to promote the orderly and efficient disposition of complex business matters. The Division has a dedicated Judge, support staff, case manager, court clerk and legal staff.

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Your company has been sued. It happens. Sooner or later, most successful companies will face one type of lawsuit or another. When your company is facing a lawsuit, resolving the plaintiff's claims without unnecessary liability involves taking the same informed and strategic approach that you take to all other business-related matters.

To make informed and strategic decisions, you need to have a clear understanding of the litigation process. You also need to have a clear understanding of your company's risk exposure resulting from the plaintiff's lawsuit. At this step, there are both steps you need to take and mistakes you need to avoid, and you will need to work closely with your company's Miami commercial litigation attorney as you work toward bringing the lawsuit to a favorable resolution.

7 Important Considerations When Your Company Has Been Sued

There are several important considerations involved in responding to a commercial lawsuit . Some of the key considerations include:

1. The Deadline to Respond (and the Risk of Default Judgment)

Once a plaintiff files a lawsuit and properly serves the defendant, the clock starts ticking for the defendant to file a response. Under the Florida Rules of Civil Procedure, defendants typically have 20 days from service to file an answer. Under the Federal Rules of Civil Procedure, the deadline to file an answer is 21 days in most cases.

If your company does not file a timely answer, then the plaintiff can seek a default judgment. Essentially, this involves asking the court to grant the remedies requested in the plaintiff's complaint based on your company's failure to respond. As a result, a timely response is critical, and this means that it is important to engage defense counsel promptly.

2. Evaluating and Asserting Counterclaims

In many cases, the best defense to a commercial lawsuit can be a strong offense. If your company has counterclaims against the plaintiff, you will want to identify and assert them promptly. Under both the Florida and Federal Rules of Civil Procedure, certain counterclaims are classified as "compulsory." This means that they must be asserted at the first available opportunity. As explained in Florida's :
Compulsory Counterclaims. A pleading must state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, provided it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction."
Importantly, there are exceptions to the compulsory counterclaim rule at both the state and federal levels, and certain counterclaims are classified as "permissive," which means that they may be filed at any time. Even so, timing can be important from a strategic perspective; and, here too, engaging defense counsel promptly is critical for evaluating your company's options and formulating an overall litigation strategy.

3. Indemnification and Third-Party Claims

Along with evaluating potential counterclaims, when facing a commercial lawsuit, it is also important to assess the applicability of any indemnification rights and the potential of shifting liability through a third-party claim. Many commercial agreements include indemnification clauses that require one party to defend and hold the other harmless in the event that the other gets sued. If the plaintiff's pending lawsuit implicates any of your company's indemnification rights under a third-party contract, then your company may be entitled to effectively extricate itself from the litigation.

Even if none of your company's indemnification rights apply, your company may still have the option of filing a third-party claim. Is a subcontractor or independent contractor responsible? Was your company relying on a vendor's services, or was a vendor acting on your company's behalf? There are a variety of possibilities-and these are options that you will want to discuss with your company's defense counsel as well.

4. Litigation Risk Assessment

While it is important to consider potential counterclaims and third-party claims, it is also important not to overlook the need to defend against the allegations in the plaintiff's complaint. When facing a lawsuit, it is imperative to conduct a comprehensive litigation risk assessment as efficiently as possible. Are the plaintiff's allegations valid? If so, what evidence is available to substantiate the allegations? Does it appear that the plaintiff is prepared to litigate through trial, or is the plaintiff more likely to be focused on settlement? These are just a few of the questions that need to be answered.

5. Assembling the Litigation Team

Responding to a commercial lawsuit is a process that requires a skilled and organized team. A litigation team will generally include the company's outside litigation counsel, its in-house leaders, and subject matter experts (SMEs) from within the organization. Each member of the team should have a clear role to play, and the team should have clear lines of communication to ensure that counsel receives all necessary information in a timely manner.

6. Litigation Hold and Preparing for Discovery

When facing a lawsuit, it is necessary to implement a litigation hold (or "legal hold"). This is an internal order not to destroy or delete any records or electronically stored information (ESI) that could potentially be relevant to the plaintiff's claims. Failure to implement an effective litigation hold can lead to sanctions during discovery or at subsequent stages of the litigation.

7. Settlement Considerations

Finally, if your company has been sued, it is also important to give due consideration to the possibility of settlement. If settling is your company's best option, then it may be in your company's interest to focus on settlement from the outset. Conversely, if settling is your company's best option, this is a fact you need to know as well-and it is a fact that will inform how you approach the litigation process.

Speak with a Miami Commercial Litigation Attorney in Confidence

Has your company been sued? If so, we can help, and we encourage you to contact us promptly for more information. Call 305-768-9909 or contact us online to speak with an experienced Miami commercial litigation attorney in confidence.

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My Company Has Been Sued-What Now? - Edelboim Lieberman

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What do you need to do if your company has been sued? Find out from a Miami commercial litigation attorney at Edelboim Liberman Revah.

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Increased Debt Limits Once Again under the Small Business Reorganization Act

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Increased Debt Limits Once Again under the Small Business Reorganization Act

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By: The Bankruptcy & Creditors' Rights Group at Trenam Law

Nicole Carnero, Summer Associate at Trenam Law

When the Small Business Reorganization Act of 2019 ("SBRA") was signed into law on February 19, 2020, it represented a significant milestone for small businesses in desperate need of bankruptcy relief. Through the SBRA, Congress created Subchapter V, a unique Chapter 11 bankruptcy process that exclusively applies to small businesses. It was meant to address the concern that small businesses were disadvantaged because traditional Chapter 11 bankruptcy is primarily geared towards large businesses. In many instances it can be far too expensive, cumbersome, and difficult to navigate for small business owners. Subchapter V allows small business debtors the same benefits of traditional Chapter 11 through a simplified process that was created with them in mind.

The SBRA was proposed and passed through Congress before small businesses were affected by the COVID-19 pandemic. Barely a month after the SBRA came into effect, the Coronavirus Aid, Relief, and Economic Security Act was passed to provide access to economic relief for the general public. This modified the eligibility requirements for Subchapter V by temporarily increasing the debt limit threshold from $2,725,625 to $7,500,000 through March 27, 2021.[1] As a result, approximately 1,643 Subchapter V bankruptcies were filed within its first year, accounting for 23% of total chapter 11 filings.[2] In contrast, traditional Chapter 11 bankruptcies only increased by 14.5% despite the pandemic related restrictions that occurred in 2021.[3]

In December 2020, the Consolidated Appropriations Act of 2021 further extended the $7,500,000 debt threshold for Subchapter V cases filed through March, 2022.[4] Because over 3,250 cases had been filed since the enactment of the SBRA, Congress recognized a need to further extend the Subchapter V debt threshold to make bankruptcy more accessible to small businesses.[5]

Once again, on June 21, 2022, President Biden signed into law the Bankruptcy Threshold Adjustment and Technical Corporations Act, which again raised the debt threshold to $7,500,000 and made the increase retroactive to Subchapter V cases filed within March 27, 2022 and June 21, 2022.[6] Congress will consider making this change permanent in 2024.[7] This article provides a brief overview of some of the key differences between Subchapter V and a typical Chapter 11, and highlights some of the key facets of a Subchapter V case that are important for creditors to keep in mind to protect their interests.

Pursuant to Section 1182 of the Bankruptcy Code, a Subchapter V debtor must be "a person engaged in commercial or business activities that has aggregate noncontingent liquidated secured and unsecured debts [as of the date of the petition] on an amount not more than $7,500,000."[8] To break this definition down further:

1) The debtor or its affiliate must be a person engaged in commercial or business activities. This includes an individual, partnership, or corporation that is engaged in the business at the time the bankruptcy is filed.[9]

2) A small business debtor's aggregate secured and unsecured debts must be:
(a) noncontingent - a debt that is not dependent on the occurrence of a future event for the liability to arise;

(b) liquidated - a debt that has a fixed determined amount; and

(c) cannot exceed $7,500,000.

3) At least 50% of the total debt must arise from the commercial or business activities of the small business debtor.[10]

Creditors should consult with counsel to determine whether the debtor made a proper election of Subchapter V.[11]

Creditors should understand the ways in which Subchapter V differs from traditional

Chapter 11 and tailor their approaches and strategies accordingly.

1) Appointment of a Subchapter V Trustee: A traditional Chapter 11 trustee is only appointed "for cause." In contrast, a Subchapter V standing trustee is automatically appointed.[12] The trustee's role is meant as a facilitator of a consensual plan process.[13] A Subchapter V trustee can help broker agreements between stakeholders and help ensure the debtor's compliance with the confirmed plan.[14] Because the trustee works to facilitate matters for all stakeholders in a Subchapter V case, creditors should communicate with the trustee as soon as possible to express their concerns.[15]

2) Accelerated Timelines: The court holds a status conference within 60 days after the debtor files for bankruptcy.[16] A debtor must file a notice with the court explaining its progress in confirming the repayment plan within 14 days before this conference.[17] Further, a debtor must file a plan within 90 days - rather than the traditional 180 days - and can only obtain an extension in limited circumstances.[18] An accelerated timetable for the debtor can be a leverage point for creditors in negotiations.

3) Elimination of the Absolute Priority Rule: The Absolute Priority Rule[19] prohibits business owners from retaining their equity interest in a debtor company unless all the creditor classes are paid in full.[20] In traditional Chapter 11 bankruptcies, equity holders can overcome this rule by giving "new value" to the business.[21] Subchapter V eliminates the Rule entirety for small businesses. This may disadvantage creditors because small business debtors can retain their equity interest without paying creditors in full if their projected disposable income is dedicated to the plan. Creditors counsel should conduct due diligence as to whether the debtor is truly dedicating its entire disposable income over the course of the plan.[22]

4) Reduced Creditor Oversight: In a traditional Chapter 11, the U.S. Trustee must determine whether a creditors committee should be appointed.[23] The committee provides oversight throughout the bankruptcy case, and it may hire professionals to ensure the creditors' interests are being protected.[24] In contrast, a committee can only be appointed in a Subchapter V upon a showing of "cause."[25] "Cause" exists if having a committee will significantly improve creditor recoveries and help expedite the case.[26]

5) No Creditor Voting: Unlike in a traditional Chapter 11, a repayment plan can be confirmed without creditor votes in a Subchapter V.[27] Creditors should consult with counsel to determine whether the plan is "fair and equitable with respect to each class of claims and interests" and does not "discriminate unfairly."[28] These analyses are more important in Subchapter V.

6) Creditors Cannot File Competing Plans: Creditors can file competing reorganization plans in traditional Chapter 11 when the debtor fails to do so within a set amount of time.[29] In contrast, only the debtor can file a plan in a Subchapter V.[30] This change, coupled with the shortened deadline to file a plan, further accelerates Subchapter V cases.[31] Creditors should get involved early and speak with the Subchapter V trustee to ensure their interests are reflected in the debtor's repayment plan.

7) No Disclosure Statement Requirement: Unlike in a traditional Chapter 11, a debtor is not required to file a disclosure statement in a Subchapter V.[32] This limits the amount of information that debtors must provide to creditors. However, debtors are still required to provide creditors with some information, such as a brief history of their financial operations and their projected ability to make plan payments.[33] It is then incumbent on creditors to do their own review of the information.

8) Modified Rights of Secured Claim Holders: The SBRA enacted a unique provision for Subchapter V debtors who leverage their personal assets.[34] Section 1190(3) of the Bankruptcy Codes allows debtors to modify claims secured by a security interest in their principle residence.[35] This is only permitted when the debtor uses their residence as collateral to grant a security interest to a secured party and receives new value in exchange.[36] The new value must then be used primarily in connection with the debtor's business.[37]

9) Deferred Payment of Administrative Expense Claims: In a traditional Chapter 11 case, the debtor must pay administrative expense claims in the ordinary course of business, or in full on a plan's effective date.[38] In contrast, a small business debtor in a Subchapter V may extend these payments throughout the life of the plan.[39] For this reason, creditors must carefully monitor post-petition payments.
Conclusion
The increased debt threshold for Subchapter V cases are here for another two years (and maybe longer), making Subchapter V alluring for struggling small businesses. Creditors must pay close attention and react quickly to a Subchapter V bankruptcy filing.

[1] Teadra Pugh, Analysis: Four Statistical Snapshots of Subchapter V's 1st Year, Bloomberg Law, (Feb 22, 2021), https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-four-statistical-snapshots-of-subchapter-vs-1st-year.

[4] Jennifer McLemore, Subchapter V of Chapter 11: New Rules and New Players to Help with Small Business Reorganization, (Oct 29, 2021), https://www.jdsupra.com/legalnews/subchapter-v-of-chapter-11-new-rules-4470399/.

[5] Colleen Restel, Senate's Bankruptcy Threshold Adjustment and Technical Corrections Act Retains $7.5 Million Eligibility for Subchapter V Small Business Debtors, Lowenstein Sandler (May 2, 2022), https://www.jdsupra.com/legalnews/senate-s-bankruptcy-threshold-9537958/.

[6] Ryan Baggs, What the Subchapter V Debt Limit Raise Means for Small Biz, Law 360, https://www.law360.com/articles/1507050/what-the-subchapter-v-debt-limit-raise-means-for-small-biz.

[7] The Bankruptcy Threshold Adjustment and Technical Corrections Act Increases the Debt Threshold for Small Businesses under the SBRA and Wage Earners in Chapter 13, Practical Law Legal Update w-036-0186

[8] 11 U.S.C § 1182(a).

[9] Small Business Bankruptcy Under The SBRA: Overview, Practical Law Practice Note Overview w-023-8889

[11] Jennifer Raviele, Subchapter V Changed the Chapter 11 Bankruptcy Landscape - How Should a Creditor Protect Itself?, JD Supra, (May 6, 2022), https://www.jdsupra.com/legalnews/subchapter-v-changed-the-chapter-11-1845098/#:~:text=May%206%2C%202022-,Subchapter%20V%20Changed%20The%20Chapter%2011%20Bankruptcy%20Landscape,Should%20A%20Creditor%20Protect%20Itself%3F&text=Subchapter%20V%20was%20intended%20to,mid%2Dsize%20and%20large%20companies.

[16] 11 U.S.C § 1188(a).

[17] William L. Norton III, The Pros and Cons of the Small Business Reorganization Act of 2019, Bradley, (June 27, 2022), https://www.bradley.com/insights/publications/2020/08/the-pros-and-cons-of-the-small-business-reorganization-act-of-2019.

[19] 11 U.S.C. § 1129(b)(2)(B).

[20] Jason Ayres, (Not-So) Small Business Reorganization Act: CARES Act Expands SBRA Eligibility, Foster Garvey, (June 27, 2022), https://www.foster.com/newsroom-alerts-small-business-reorganization-act-cares-act-expands-sbra-eligibility#:~:text=To%20make%20chapter%2011%20more,to%20qualify%20for%20SBRA%20relief.

[23] Jill C. Walters, Subchapter V. vs. 'Ordinary' Chapter 11 Practice Changes for Small Business Debtors, Bloomberg Law, chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.womblebonddickinson.com/sites/default/files/2021-09/SubchapterV_vs_Ordinary_Chapter11_Practice_Changes_Small_Business_Debtors.pdf.

[28] 11 U.S.C § 1191(b).

[29] 11 U.S.C § 1121(c).

[31] George Cauthen, The Small Business Reorganization Act: An Unintended Lifeline For Small Businesses Considering Restructuring Due to COVID-19, Nelson Mullins, (Aug 24, 2020), https://www.nelsonmullins.com/idea_exchange/insights/the-small-business-reorganization-act-an-unintended-lifeline-for-small-businesses-considering-restructuring-due-to-covid-19#:~:text=In%20a%20traditional%20Chapter%2011,plans%20must%20be%20filed%20quicker.

[33] 11 U.S.C § 1190(a)(1).

[35] 11 U.S.C § 1190(3).

[38] Sam Della Fera Jr., 'Small Business' Bankruptcies: What You Need to Know about Subchapter V of Chapter 11, (Jan 27, 2022), https://www.law.com/njlawjournal/2022/01/27/small-business-bankruptcies-what-you-need-to-know-about-subchapter-v-of-chapter-11/.

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Increased Debt Limits Once Again under the Small Business Reorganization Act - Business Law Section of The Florida Bar

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By: The Bankruptcy & Creditors' Rights Group at Trenam Law Nicole Carnero, Summer Associate at Trenam Law When the Small Business Reorganization Act of 2019 ("SBRA") was signed into law on February 19, 2020, it represented a significant milestone for small businesses in desperate need of bankruptcy relief.

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Year In Review: Key Insights on Chapter 11 for Small Business Owners Considering Bankruptcy in 2024

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Year In Review: Key Insights on Chapter 11 for Small Business Owners Considering Bankruptcy in 2024

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It's been a tough year for many small businesses in Florida. From the lingering effects of the COVID-19 pandemic to Hurricane Idalia, various issues negatively impacted small business owners who could do little but face the consequences of factors that were beyond their control.

For small businesses that are struggling heading into 2024, it may be worth considering a bankruptcy. There are special procedures for small business bankruptcy filings under Chapter 11, and these procedures make filing an economical choice for companies of all sizes. If you are interested in speaking with a Miami Chapter 11 bankruptcy lawyer , here are some key insights that you can use to make informed decisions as you move forward:

When Is It Time to Consider a Business Bankruptcy?

Small business owners have several factors to consider when thinking about filing for bankruptcy under Chapter 11. While this starts with assessing whether the business can meet Chapter 11's filing requirements, there are numerous substantive considerations as well. For example, when evaluating the viability of a Chapter 11 filing, small business owners will want to carefully consider questions such as:

Are the benefits of a Chapter 11 filing the benefits your company needs?

Do the benefits outweigh the drawbacks?

Are there better alternatives available?

Do any of the business's creditors have defenses to discharge?

Do any of the business's creditors have claims for non-dischargeability?

We answered these questions-and many more-in an article titled, When Is It Time to Consider a Business Bankruptcy? earlier this year. If you are considering a Chapter 11 filing, this article is a good place to start.

Is a Chapter 11 Bankruptcy the Smart Choice for Your Business?

While filing under Chapter 11 is a smart choice for many small business owners, it isn't the right choice for all companies. Depending on the circumstances, various alternatives to a Chapter 11 filing could be better for addressing a company's financial situation. These may include alternatives such as:

A Chapter 7 liquidation filing

An equity infusion

Internal restructuring

Informal workout (debt restructuring)

An assignment for the benefit of creditors

Additionally, while a traditional Chapter 11 filing will make sense for some companies, small businesses will often benefit from making a Subchapter 5 filing or submitting a "small business case" under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. To learn about all of these options, you can read: Business Bankruptcy: Options and Alternatives for Companies in Financial Distress .

Can Your Small Business Take Advantage of the Benefits of Subchapter 5?

For many small businesses, the best option for restoring their financial stability will be to file under Subchapter 5. Congress created Subchapter 5 (of Chapter 11) in 2019 with the specific purpose of opening up the benefits of Chapter 11 to small businesses. Subchapter 5 streamlines the reorganization process for small businesses while also reducing the time and costs involved.

To qualify for a Subchapter 5 bankruptcy, a business must have "aggregate noncontingent liquidated secured and unsecured debts [of] not more than $7,500,000 (excluding debts owed to 1 or more affiliates or insiders) not less than 50 percent of which arose from the commercial or business activities of the debtor." If your business qualifies, you can read Subchapter 5 Bankruptcy: Understanding the Benefits for Small Businesses to learn more.

What Benefits Can Your Small Business Achieve Through a Chapter 11 Filing?

Whether you choose to file under Subchapter 5, BAPCPA, or the standard reorganization provisions of Chapter 11, you need to make sure that filing will be worth it before you get started. While all types of Chapter 11 bankruptcy filings afford several benefits, a Chapter 11 filing won't necessarily provide the outcome that a struggling small business needs. Some of the main benefits of filing under Chapter 11 include:

Protection under the "automatic stay"

Access to debtor-in-possession financing

The ability to reject leases and other executory contracts

The ability to sell encumbered business assets

No oversight from a bankruptcy trustee

As discussed above, Subchapter 5 and BAPCPA filings offer additional benefits as well. To learn more about all of these benefits, you can read: A Closer Look at Some of the Benefits (and Limitations) of a Chapter 11 Business Bankruptcy .

What Can You Do to Streamline the Chapter 11 Bankruptcy Process?

Once you make the decision to move forward with pursuing a small business bankruptcy, you will want to do everything you can to streamline the process. While your Miami Chapter 11 bankruptcy lawyer will play a central role in helping you complete the process as efficiently as possible, there are some steps that you will need to take as well-including steps that you will need to take prior to filing. For some tips on what you can do to get ready, you can read: How Can (and Should) Business Owners Streamline the Bankruptcy Process?

Will Your Small Business's Creditors Have Grounds to Intervene in Its Chapter 11 Filing?

Finally, along with assessing your business's eligibility and ensuring that filing under Chapter 11 is your best option, you will also want to work with your lawyer to determine if your business's creditors will have grounds to intervene. For example, if any of your business's creditors have grounds to assert preference claims, this could throw a wrench in the process-and you may want to address the issue before submitting your small business's petition to the U.S. Bankruptcy Court. For more information about this potential concern (and what you can do about it), you can read: When Can Creditors Assert Preference Claims in Business Bankruptcy Cases?

Request a Free Initial Consultation with a Miami Chapter 11 Bankruptcy Lawyer

If your small business is struggling and you are thinking about filing for bankruptcy in 2024, we invite you to contact us for more information. To request a free initial consultation with a Miami Chapter 11 bankruptcy lawyer at Edelboim Liberman, please call 305-768-9909 or send us a message online today.

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Year In Review: Key Insights on Chapter 11 for Small Business Owners Considering Bankruptcy in 2024 - Edelboim Lieberman

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Learn some key insights for small business owners who are considering bankruptcy in 2024 from a Miami Chapter 11 bankruptcy lawyer at Edelboim Lieberman.

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Responding to a Breach of Contract: What Florida Business Owners Need to Know

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Responding to a Breach of Contract: What Florida Business Owners Need to Know

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As a business owner, it is important to know what to do when a vendor, contractor, customer or other party breaches a contract with your company. While an overly aggressive response can unnecessarily jeopardize an important business relationship, failing to act forcefully can invite additional breaches in the future. To ensure that you are making informed decisions with your company's best interests in mind, you should speak with a Miami breach of contract lawyer before things get out of hand.

When you speak with a lawyer, your lawyer will examine the relevant facts and contract terms to assess your options and help you decide how best to proceed. In most cases, this assessment will focus on three key questions:

What options does your company have to pursue enforcement?

What remedies are available?

The first and most important issue to consider is whether the act or omission in question truly constitutes a breach of contract . When assessing whether a counterparty's action (or failure to act) constitutes a breach, there are three primary considerations: (i) whether there is room for interpretation of the relevant contract term(s); (ii) whether the contract exempts the violation from constituting a breach; and, (iii) whether the counterparty has a contractual right to cure.

Contract Interpretation

In many cases, commercial litigation arises out of disagreements regarding contract interpretation. Simply put, one party believes there has been a breach, and the other party does not. As a result, when deciding what to do about an apparent breach of contract, it is critical to carefully review the relevant contract term(s) and determine if there is any room for disagreement over their implications.

Occasionally, there will be no question that one party has breached. For example, if one party provides a service and the other party doesn't pay on time, this could be a fairly straightforward scenario. But, if there are questions regarding whether the services provided are contractually compliant, or if the contract does not include clear payment terms, even this seemingly straightforward scenario could quickly become much more complicated.

Violations That Don't Constitute a Breach

Sometimes it will also be necessary to assess whether a violation of the parties' contract constitutes a breach. One scenario in which this commonly arises is when a party fails to meet a contract's key performance indicators (KPIs). Oftentimes, parties will agree that failing to meet a KPI doesn't rise to the level of a breach, but instead either: (i) the KPIs are aspirational only; or, (ii) violations of the KPIs warrant lesser remedies than a breach of contract.

But, even here, questions can arise. For example, does the contract include a provision requiring good faith and fair dealing? If so, does this provision apply in light of the circumstances at hand? Identifying all pertinent contract provisions is critical, and this is an area where an experienced Miami breach of contract lawyer can help.

Contractual Right to Cure

When assessing a potential breach-of-contract claim, it is also necessary to determine whether the counterparty has a contractual right to cure. If so, then an apparent breach may not justify legal action-at least not right away.

For example, it is fairly common for commercial contracts to include grace periods for payment. A payment may be due on a particular date (and interest may begin to accrue immediately upon nonpayment), but the payor might have a 30-day right to cure, or "grace period," before the payee is entitled to pursue legal action.

What Options Does Your Company Have to Pursue Enforcement?

Assuming that your company is dealing with a breach, the next step is to determine what options your company has available. This also requires a careful look at the relevant contract terms.

Commercial contracts frequently include provisions for mandatory mediation or arbitration (or both). If your company's contract has one of these clauses, you will need to pursue the relevant form of alternative dispute resolution (ADR)- the breach at issue is exempt.

While mandatory ADR clauses are common, it is also common for exceptions to apply. For example, straightforward payment claims are often exempt, as are claims seeking injunctive relief to prevent additional losses. These include claims for breaches of confidentiality, non-competition and non-solicitation covenants, among others.

What Remedies Are Available?

Finally, once you have determined that you have a claim for breach of contract and you know what options your company has available, you will also want to assess what remedies are available. This will tell you whether pursuing enforcement is worth it. In some cases, the available remedies are not limited by contract, and contracting parties can seek full damages, injunctive relief or other appropriate remedies.

But, contract clauses that limit the parties' potential liability are also fairly common. Commercial contracts often include damages caps, liquidated damages provisions and other limitations that prevent parties from seeking the full remedies to which they would otherwise be entitled. The idea behind these clauses is that they make entering into the contract viable-as accepting unlimited exposure under a contract that only has limited commercial value is often a poor business decision.

Taking all of these considerations into account, business owners should be able to make informed decisions about how to respond to an apparent breach of contract. Then, they can enter into negotiations to resolve the issue informally if desired, or they can pursue mediation, arbitration or litigation if necessary.

Speak with a Miami Breach of Contract Lawyer in Confidence

If you are dealing with a breach of contract and need to know more about the options your company has available, we encourage you to get in touch. We have extensive experience advising companies of all sizes in connection with commercial contract disputes in Florida. To speak with an experienced Miami breach of contract lawyer at Edelboim Liberman in confidence, please call 305-768-9909 or request a confidential initial consultation online today.

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Responding to a Breach of Contract: What Florida Business Owners Need to Know - Edelboim Lieberman

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Learn about some key considerations for protecting your company after a breach from an experienced Miami breach of contract lawyer at Edelboim Lieberman.

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Here's why business experts say Chapter 11 bankruptcies are on the rise

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Here's why business experts say Chapter 11 bankruptcies are on the rise

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WEST PALM BEACH, Fla. - Several big companies have announced Chapter 11 bankruptcy filings in recent months and legal and business experts are breaking down what's contributing to the spike in filings.

According to Bloomberg, restaurant chain Red Lobster may soon be restructuring through Chapter 11 bankruptcy. The news came out last week.

This week, retailer Express announced on its website the company has filed for Chapter 11.

Tijuana Flats, a Tex-Mex chain, made a similar announcement. They're closing 10 of their Florida restaurants, including the Boynton Beach location.

"Interest rates have ticked up. So now you've got people who might have had systemic business problems, but the pandemic sort of hit the pause button," Adam Marshall, an attorney with Lorium Law, said. "And now, even though interest rates, if you look over 30 years, are also still at historic lows, they're relatively very high based on what we got used to a couple years ago, and that makes the cost of money more expensive, which impacts a lot of businesses."

Carl Gould, a business analyst and founder of 7 Stage Advisors, agreed and said he thinks this trend will likely continue as businesses struggle to cover their debt service.

"If you're a company where you needed to borrow money for your operations, you borrowed money at a certain rate, now inflation and things are more and more expensive," Gould said. "...As long as we're gonna see the volatility of inflation and interest rates, you're going to see bankruptcies. ...It's that ripple effect."

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Here's why business experts say Chapter 11 bankruptcies are on the rise

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Several big companies have announced Chapter 11 bankruptcy filings in recent months and legal and business experts are breaking down what's contributing to the spike in filings.

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Staving Off Chapter 11: When Is (and Isn’t) It Feasible to Avoid a Business Bankruptcy?

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Staving Off Chapter 11: When Is (and Isn’t) It Feasible to Avoid a Business Bankruptcy?

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When a company is struggling financially, filing for bankruptcy under Chapter 11 is an option that allows the company to stay in business while it works to regain financial stability. But, in this scenario, pursuing reorganization under Chapter 11 is not necessarily the only option that is available. Struggling companies may have a variety of other options as well, and an experienced Miami bankruptcy litigation attorney should be able to help owners and executives consider of these options in light of the varying benefits, risks and probabilities involved.

5 Options for (Possibly) Avoiding a Chapter 11 Bankruptcy

To be clear, not all of the alternatives to a filing are available in all cases. Additionally, some of these options are more straightforward than others, and, depending on a company's specific circumstances, filing under Chapter 11 could simply be the most favorable and most cost-effective option. But, when dealing with financial distress, it is worth putting all of the options on the table and ensuring that you make an informed and strategic decision with your company's best interests in mind.

Taking these considerations into account, here are five options that companies be able to pursue to avoid a Chapter 11 bankruptcy:

1. Eliminating Unnecessary Operating Expenses

Eliminating unnecessary operating expenses can free up funds to pay a company's debts as they come due. From subcontractors' services that are no longer needed to underperforming profit centers and from overstaffing to overspending on travel and other non-essentials, companies may have a variety of monthly operating expenses that they can (and perhaps should) eliminate. While one or two unnecessary operating expenses might not have a material impact on a company's monthly cash flow, when these expenses start to add up over time, they can become a problem that is worth addressing.

2. Eliminating Unnecessary Overhead

Eliminating unnecessary overhead can be an effective cost-cutting strategy for many companies as well. By definition, overhead expenses do not contribute directly to a company's bottom line, and while some overhead expenses are necessary, others are not. If your company is spending more than it needs to on overhead, then cutting its overhead expenses could be a worthwhile step as well. Even if this isn't enough to stave off a Chapter 11 filing on its own, it could help-and eliminating unnecessary overhead is an important step for responsibly managing a company's finances post-bankruptcy as well.

3. Letting Leases, Licenses or Other Contracts Expire

Companies can also often achieve substantial cost savings by letting leases, licenses and other contracts expire. If your company can continue making payments under a lease, license or other contract until the expiration date arrives, this could ultimately prove to be the most cost-effective approach. Just keep in mind that some licenses and other contracts may renew automatically, and for those that don't, the relevant personnel will need to be made aware that the company is not intending to pursue renewal.

4. Restructuring or Renegotiating the Company's Financial Obligations

If these steps are not enough to help your company to meet its financial obligations as they come due, then it may be time to consider restructuring or renegotiating these obligations with the company's creditors. Creditors will be willing to consider restructuring or renegotiation in many cases-particularly when they know that the alternative is going through a Chapter 11 bankruptcy. There are a variety of options and strategies for doing so, and while there are no guarantees, an experienced Miami bankruptcy litigation attorney may be able to help you leverage your company's present circumstances to secure more favorable terms.

5. Renegotiating (or Enforcing) Customers' Payment Terms

Along with reducing your company's monthly costs, another option may be to improve its positive cash flow. For example, if your company's customers are currently paying their bills Net 30, renegotiating to Net 10 could provide the financial boost your company needs. Additionally (or alternatively), if any of your company's customers are delinquent on their payments, now may be the time to enforce their obligation to pay.

Could Filing for Chapter 11 Bankruptcy Be Your Company's Best Option?

While business owners and executives often assume that it is best to avoid a Chapter 11 bankruptcy if at all possible, this is not necessarily the case. Under the right circumstances, pursuing a business bankruptcy (or small business bankruptcy ) under Chapter 11 can be a cost-effective solution that affords access to several benefits.

This (but is not limited to) benefits such as:

Automatic Stay - Filing for bankruptcy under Chapter 11 triggers an "automatic stay" that prevents the company's creditors from pursuing collection. This can provide immediate relief for companies that are facing foreclosure, liens, levies and litigation.

Debtor-in-Possession Financing - Once a company files for bankruptcy under Chapter 11, it gains the opportunity to secure debtor-in-possession financing. This financing can provide much-needed financial relief in many cases.

Rejection of Leases and Other Executory Contracts - If a company cannot afford to wait for its leases or other executory contracts to expire, and if renegotiating is not on the table, filing for bankruptcy under Chapter 11 may provide the opportunity to reject these contracts despite the counterparties' objections.

Ultimately, deciding how best to deal with financial instability requires a careful assessment of all relevant facts and circumstances and all available options. There is no single "right" answer, and while avoiding bankruptcy may be preferable in some scenarios, promptly initiating a Chapter 11 proceeding will be the best course of action in others.

Speak with a Miami Bankruptcy Litigation Attorney in Confidence

If you would like to discuss your company's options with an experienced Miami bankruptcy litigation attorney, we invite you to get in touch. We represent companies throughout South Florida in both bankruptcy and non-bankruptcy matters. To schedule a confidential initial consultation with one of our senior attorneys, please call 305-768-9909 or tell us how we can get in touch online today.

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Ways to Avoid Business Bankruptcy and Stave Off Chapter 11

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Learn key considerations for companies that are in financial distress from a Miami bankruptcy litigation attorney at Edelboim Lieberman.

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Understanding Foreclosure Laws in Florida for Real Estate Investors

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Understanding Foreclosure Laws in Florida for Real Estate Investors

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Understanding Foreclosure Laws in Florida for Real Estate Investors - PropertyOnion

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Understanding the nuances of foreclosure laws in Florida may be a good idea for homeowners, but it’s crucial for real estate investors looking to make informed decisions. These laws not only dictate how foreclosures can occur but also significantly influence property values and investment opportunities. Whether you’re eyeing a property for its potential value after […]

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Commercial Foreclosures in Florida: What Financially Distressed Companies Need to Know

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Commercial Foreclosures in Florida: What Financially Distressed Companies Need to Know

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Commercial Foreclosures in Florida: What Financially Distressed Companies Need to Know - Edelboim Lieberman

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What do you need to know if your company received a foreclosure notice? Find out from a Miami commercial real estate attorney at Edelboim Lieberman.

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Understanding Bankruptcy | Southern District of Florida | United States Bankruptcy Court

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Bankruptcy is a set of federal laws and rules that can help individuals and businesses who owe more debt than they can pay by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy cases are filed in the bankruptcy court. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court. The vast majority of cases are filed under the three main chapters of the Bankruptcy Code, which are Chapter 7, Chapter 11, and Chapter 13. The primary purposes of the law of bankruptcy are:

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2024 Year in Review: Key Insights for South Florida Business Owners Considering Bankruptcy in 2025

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2024 Year in Review: Key Insights for South Florida Business Owners Considering Bankruptcy in 2025

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2024 Year in Review: Bankruptcy Insights for South Florida Owners

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Take a look back at some of the key 2024 insights our Miami bankruptcy litigation attorneys shared that business owners can use in 2025 too.

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Florida Debt Collection Laws | Resources | SWRS

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Florida’s debt collection laws protect both debtors and creditors. Learn more about these laws and how they might apply to you here. Contact SWRS for help!

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Protecting Creditors’ Rights During (and After) the Chapter 11 Bankruptcy Process

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Protecting Creditors’ Rights During (and After) the Chapter 11 Bankruptcy Process

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Protecting Creditors’ Rights During (and After) the Chapter 11 Bankruptcy Process - Edelboim Lieberman

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Learn about creditors’ options for protecting their rights during (and after) the Chapter 11 bankruptcy process from an experienced Miami bankruptcy litigation attorney.

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Involuntary Bankruptcy Filings & Legal Requirements

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Involuntary Bankruptcy Filings & Legal Requirements

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While most debtors file for bankruptcy by choice, there are some situations in which creditors will force a debtor to file for bankruptcy involuntarily. This involves creditors filing the petition for bankruptcy on behalf of the debtor. An involuntary bankruptcy involves a business debtor more often than an individual debtor, although sometimes a wealthy individual may be targeted. This is because a creditor will find it worthwhile to go through this process only if the debtor has meaningful assets from which to collect. If a debtor does not have substantial assets, the automatic stay will shield most of their money and property, so a creditor probably will try to collect in other ways.

Setting Up an Involuntary Bankruptcy

A creditor can file a bankruptcy petition with the court only under Chapter 7 or Chapter 11. They cannot trigger the provisions of Chapter 13 or Chapter 12. In the petition, the creditor must explain that they are pursuing an involuntary bankruptcy on the debtor's behalf because the debtor is failing to pay debts that are due, or because a custodian, receiver, or agent took control of the debtor's property within the last 120 days to enforce a lien.

If you are a debtor for whom an involuntary bankruptcy petition has been filed, you can oppose the petition and show that the grounds alleged by the creditor are not justified. This will involve the creditor and the debtor presenting their case at a hearing before a judge. The judge will dismiss the petition if they find the debtor's position persuasive. A debtor may receive compensation for their costs from the creditor that filed the petition if the judge dismisses it. Otherwise, the judge will keep the petition intact and move forward with the case.

If you choose not to oppose the petition, you will be brought into the proceedings as though you had filed for bankruptcy.

Limitations on Involuntary Bankruptcy

A single creditor often will not be allowed to file a petition for an involuntary bankruptcy. They can file a petition only if they are owed a certain threshold amount, which increases periodically, and if there are fewer than 12 unsecured creditors for that debtor. If the debtor has more than 12 unsecured creditors, meanwhile, at least three of them must participate in the bankruptcy petition, and they must meet a threshold amount of unsecured debt as a group, which also increases periodically. (Unsecured debt is debt that is not attached to a certain asset that a creditor can seize if the debtor fails to pay the debt. A creditor with a secured debt usually will not need to file an involuntary bankruptcy petition because they can simply take the asset.)

Moreover, creditors cannot pursue an involuntary bankruptcy petition if a dispute surrounds the debt on which they are trying to collect. They also cannot take this step if the debt is contingent, which means that it is based on an event that has not yet occurred.

Creditors cannot pursue an involuntary bankruptcy under any circumstances against farmers or certain types of organizations, such as non-profits, credit unions, insurers, and banks.

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Involuntary Bankruptcy Filings & Legal Requirements

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A creditor sometimes can force a debtor, usually a business, to file for bankruptcy by completing a petition on behalf of the debtor.

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Involuntary Bankruptcy: What Florida Business Owners and Executives Need to Know

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Involuntary Bankruptcy: What Florida Business Owners and Executives Need to Know

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Involuntary Bankruptcy: What Florida Business Owners and Executives Need to Know - Edelboim Lieberman

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Learn what business owners need to know about facing involuntary bankruptcy proceedings in Florida from an experienced Miami bankruptcy litigation attorney.

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Cybersecurity Breaches Are Increasing Business Insolvency Risks

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Cybersecurity Breaches Are Increasing Business Insolvency Risks

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Cybersecurity Breaches Are Increasing Business Insolvency Risks

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Data breaches and ransomware attacks in the US are increasing companies’ risk of financial losses, in many cases dragging them into bankruptcy or putting them out of business altogether.

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What Are the Different Types of Business Bankruptcies?

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What Are the Different Types of Business Bankruptcies?

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What Are the Different Types of Business Bankruptcies? - Edelboim Lieberman

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Learn about the options that are available to financially distressed businesses in Florida from an experienced Miami business bankruptcy attorney.

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Butting Heads - Resolving Disputes with Shareholders

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Shareholders often find themselves “butting heads” with the board of directors at the co-op buildings in which they live. Often the disputes, which arise are disagreements over a shareholder’s personal agenda, and a board not allowing them to proceed forward with their plans.

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5 Potential Outcomes of Shareholder Disputes

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5 Potential Outcomes of Shareholder Disputes

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5 Potential Outcomes of Shareholder Disputes - Edelboim Lieberman

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Learn potential means of resolving shareholder disputes in South Florida from a Miami shareholder dispute attorney at Edelboim Lieberman.

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Dissolve or Withdraw a Business - Division of Corporations - Florida Department of State

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Business Divorce: Key Considerations for Bringing Your Partnership to an End

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Business Divorce: Key Considerations for Bringing Your Partnership to an End

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Business Divorce: Key Considerations for Bringing Your Partnership to an End - Edelboim Lieberman

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Learn about five key considerations when preparing for a business divorce from an experienced Miami partnership dispute attorney at Edelboim Lieberman.