Commercial Bankruptcy

Mounting bills can put stress on any family’s budget, but when there isn’t enough income coming in to pay off those debts, late bill payments are inevitable. If you find yourself facing insurmountable debt and bankruptcy appears to be your only option, contactan experienced bankruptcy attorney to discuss your options.

The Berkley Bankruptcy Attorneys represents clients in Phoenix and Maricopa County with consumer and small business bankruptcies.

If you are considering a Chapter 7 or Chapter 13 filing, contact attorney Martin J. Berkley today. You can reach us by toll-free phone or e-mail. Call 1-480-921-2993.

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Are you concerned about whether you qualify for Chapter 7 bankruptcy protection?

At the Berkley Bankruptcy Attorneys in Tempe, our skilled lawyer can show you how the bankruptcy means test works. Contact us for a free initial consultation.

Experienced Arizona bankruptcy attorney Martin J. Berkley of the Berkley Bankruptcy Attorneys has successfully filed thousands of Chapter 7 and Chapter 13 bankruptcies for those in financial trouble.

We can help you too. Contact us, toll-free, for a free consultation. 480-921-2993.

Commercial Bankruptcy

Like a consumer, a business sometimes finds itself in the uncomfortable position of being unable to pay its debts. One solution is to file for bankruptcy, a legal process in federal bankruptcy court that releases the business from the obligation to pay all or some of its debts.

The experienced lawyers at Berkley Law Office in Tempe, Arizona advise business owners about whether bankruptcy is right for them.

Bankruptcy Choices for Small Businesses

Businesses must choose among alternative types of bankruptcies, each of which corresponds to a different chapter of the federal Bankruptcy Code. Businesses usually choose either Chapter 7 or Chapter 11, or occasionally Chapter 13. Sometimes businesses can be involuntary drawn into bankruptcy by their creditors, who face stiff financial penalties if they initiate an involuntary bankruptcy for invalid reasons.

Chapter 7

Chapter 7 bankruptcies are called “liquidation bankruptcies.” Chapter 7 is usually employed by consumer debtors, but can also be used by businesses that want to liquidate their assets to be relieved of debt. A Chapter 7 bankruptcy is commenced when the business files a petition with the bankruptcy court. The court then orders an automatic stay of all collection action against the business and its property. A court-appointed trustee manages the details of the bankruptcy, selling business assets to satisfy business debt, to the extent possible. At the conclusion of the proceeding, remaining debts of the business are not discharged as with an individual debtor, but generally the business ceases to exist because its assets are gone and it is no longer a profitable concern.

Chapter 11

In Chapter 11 bankruptcies, which are usually filed by businesses and rarely by individuals, the commercial debtor is usually allowed to stay in business throughout the bankruptcy proceedings. A business debtor may only operate independently in its ordinary course; transactions outside the ordinary course of business require court approval.

A Chapter 11 proceeding, like one under Chapter 7, is initiated by filing a petition, but a trustee is not automatically appointed. Although the bankruptcy judge may decide to appoint a trustee in a Chapter 11 case, it is the exception rather than the rule. As in Chapter 7, the filing of the bankruptcy petition stops creditors from attempting to collect their debts.

The debtor has time to file a proposed plan of reorganization. The plan of reorganization sets forth in detail how the debtor intends to conduct its business, while continuing to make payments to its creditors. In some situations, creditors may instead or also propose plans of reorganization. Creditors are divided into classes with varying rights depending upon the types of debt they hold. The approval process involves negotiation and input from creditors. Ultimately, a plan must be approved by the court. In some cases, the court approves the plan even though some of the creditors did not. If no plan is approved, however, the bankruptcy is often converted to a Chapter 7 liquidation or may be dismissed.

The choice between Chapter 7 and Chapter 11 is not necessarily permanent; once proceedings have begun, a case may be converted to a different chapter, under certain circumstances.


Bankruptcy may not be the best option for every business, but sometimes it is the best choice a business owner can make. Alternatives to bankruptcy include working informally with creditors toward a repayment plan or assigning assets for the benefit of creditors.

A lawyer experienced in bankruptcy law, like those at Berkley Bankruptcy Attorneys in Tempe, Arizona, can help a business decide whether bankruptcy best meets its needs.

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DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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