Small Business Bankruptcy

Small Business Bankruptcy Attorneys in Los Angeles

7,500+ Cases Filed. Same-Day Consultations in English, Spanish, & Farsi.

Small businesses across Los Angeles and the San Fernando Valley are facing real financial pressure, and the decisions made now can determine whether a business survives or closes. At RHM LAW LLP, our bankruptcy attorneys have filed or overseen more than 7,500 cases over more than 20 years of practice. We represent sole proprietorships, LLCs, and partnerships from offices in Los Angeles and Encino, and we understand that the right path forward depends on your entity type, your debt, and whether keeping the business open is the goal.

Filing for small business bankruptcy doesn’t have to mean closing permanently. In many cases, it gives you time to reorganize, retain vital assets, and keep income flowing while addressing debt. It can also stop an IRS garnishment or bank levy immediately. The chapter that fits your situation depends on how your business is structured, what you owe, and what you want to preserve.

To discuss your small business debt relief options during a 30-minute complimentary consultation, contact us today. We’re here to help.

Can Bankruptcy Save Your Business?

RHM LAW LLP represents sole proprietorships, limited liability companies (LLCs), and partnerships in bankruptcy proceedings throughout the Los Angeles area. Your situation is unique, and our attorneys can build a legal strategy around your specific debt and business goals.

We can help you explore all of the debt relief options available to you, including:

Small business Chapter 7 bankruptcy: Filing for Chapter 7 liquidates business assets to pay creditors and generally marks the end of the business. A trustee is appointed to manage the liquidation, relieving you of direct creditor contact. Corporations and LLCs filing Chapter 7 don’t receive a discharge of debts and aren’t entitled to exemptions. This chapter is used most often by sole proprietors winding down. Because a sole proprietor is personally liable for all business debts, every bankruptcy chapter is potentially available to them.

Small business Chapter 13 bankruptcy: Available only to sole proprietors with debts within statutory limits, Chapter 13 can protect you from eviction, IRS collections, and other creditor actions while you get the business back on stable ground. You keep running operations with regular income intact, making a single payment to the Chapter 13 Trustee. The Chapter 13 reorganization is substantially more cost-effective than a standard Chapter 11.

Chapter 11 bankruptcy: Available to corporations, LLCs, partnerships, and sole proprietors, Chapter 11 can shield you from personal and professional creditors, help prevent foreclosure or seizure, and protect current assets and future earnings. We can also help you address certain IRS debts, maintain vendor relationships, and work to avoid layoffs while working through a reorganization plan.

Not every business is best served by filing for bankruptcy. We look at every situation on a case-by-case basis and can advise on debt consolidation and other alternatives when those better fit your circumstances.

Subchapter V of Chapter 11: Streamlined Reorganization for Small Businesses

One of the most significant developments in small business bankruptcy law is Subchapter V of Chapter 11, created by the Small Business Reorganization Act of 2019 and effective since February 2020. Designed to make Chapter 11 reorganization faster and more affordable, Subchapter V is available to businesses with aggregate noncontingent, liquidated secured and unsecured debts at or under $3,424,000 (as of April 1, 2025), provided at least 50% of those debts arise from commercial or business activity.

Traditional Chapter 11 carries significant administrative costs: mandatory creditors’ committees, a required disclosure statement, and ongoing U.S. Trustee quarterly fees. Subchapter V eliminates all three. A standing trustee appointed by the U.S. Trustee facilitates the reorganization without taking over operations. You remain the debtor in possession and keep running your business throughout the case. A reorganization plan is due within 90 days of filing, and the process typically moves much faster than traditional Chapter 11. Subchapter V also doesn’t follow the absolute priority rule, which can allow owners to retain equity without fully satisfying unsecured creditors, provided the plan commits all projected disposable income to repayment over three to five years and meets the court’s feasibility standard.

Businesses with debt above the current limit must use traditional Chapter 11 for reorganization. Bipartisan legislation has been introduced in both the Senate and House to permanently raise the Subchapter V limit back to $7,500,000, but that legislation has not been enacted into law. Whether Subchapter V is the right path depends on your debt level, entity type, and business goals. We can help you evaluate the options.

Working with a Small Business Bankruptcy Attorney in Los Angeles

Traditional Chapter 11 is complex and costly, with administrative burdens better suited to larger corporations. Subchapter V has changed that calculus for many smaller businesses, but it isn’t the only alternative. Whatever debt problems your business is facing, our attorneys can evaluate whether Subchapter V, standard Chapter 11, Chapter 13, or Chapter 7 fits your situation. We can also advise on non-bankruptcy alternatives when those better serve your goals.

Early legal counsel matters. The right chapter and the right timing depend on your entity type, debt composition, and what you want to preserve. A decision made under financial pressure without proper guidance can limit your options before you’ve had a chance to explore them. Our small business bankruptcy attorneys serve clients throughout Los Angeles and the San Fernando Valley, with offices in Los Angeles and Encino.

Call us at (213) 344-0043 to schedule a 30-minute complimentary consultation. We offer same-day appointments and consultations in English, Spanish, and Farsi.

How Subchapter V Reorganization Works in Practice

When a small business files under Subchapter V of Chapter 11, the automatic stay takes effect immediately, halting most collection actions, including lawsuits, repossessions, and garnishments. The business owner continues operating as the debtor in possession, with day-to-day management remaining in the owner’s hands throughout the process.

The Role of the Trustee

A standing trustee, appointed by the U.S. Trustee, works with the debtor and creditors to facilitate a consensual reorganization plan. The trustee’s role is facilitative, not managerial. If directed by the court, the trustee may review business viability and investigate the debtor’s financial condition, but doesn’t take over operations.

Timeline & Plan Confirmation

The process moves quickly relative to traditional Chapter 11. A status conference is generally held within 60 days of filing, and the reorganization plan is due within 90 days, with extensions available for cause. Plan confirmation in Subchapter V typically takes roughly six months, compared to approximately 10 months in a standard Chapter 11 case.

Cost Advantages Over Traditional Chapter 11

The cost structure is meaningfully different from standard Chapter 11:

No creditors’ committee: In standard Chapter 11, an unsecured creditors’ committee adds significant administrative overhead and legal cost. Subchapter V eliminates the committee entirely.

No disclosure statement: Traditional Chapter 11 requires a detailed, court-approved disclosure statement before the plan goes to creditors. Subchapter V removes this requirement, reducing both cost and delay.

No U.S. Trustee quarterly fees: Standard Chapter 11 debtors pay quarterly fees to the U.S. Trustee program based on disbursements. Those fees don’t apply in Subchapter V.

Administrative expenses paid over time: Rather than requiring a lump-sum payment of administrative expenses at confirmation, Subchapter V allows those costs to be spread across the plan period.

Equity Retention Under Subchapter V

Subchapter V relaxes the absolute priority rule that governs traditional Chapter 11. Under standard Chapter 11, owners generally can’t retain equity unless all creditors are paid in full first. Under Subchapter V, an owner who commits all projected disposable income to the plan over three to five years may keep equity even without fully satisfying unsecured creditors, subject to the plan meeting the court’s feasibility standard. For business owners weighing whether reorganization is realistic, that distinction is worth discussing with counsel familiar with cases filed in the U.S. Bankruptcy Court for the Central District of California.

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Client Reviews

What Clients Say About Working With Us

"These are top-notch pros that'll have your back. I cannot recommend them highly enough."
Where to begin? I had a vile evil credit union repo my car over a misunderstanding, they wouldn't work with me even when I offered full payment plus repo fees (this was my first repo!) so I didn't know what to do. I met with a few lawyers but when I met with Simon he broke things down and gave me my options. I needed a car - so I filed BK and included the car to get it back. The evil credit union fought and Simon GOT ME MY CAR BACK!!! His team is amazing!!!! Maria Donna etc!!! These are top-notch pros that'll have your back. I cannot recommend them highly enough. Sincerely they saved my life. LA with no car!? ARGH!!!!!! *THANX ALL!!!!

- Tim C.
"He not only saved my house but also got rid of all my debt. They are not your typical attorneys and their creativity really allowed me to do things that other attorneys never mentioned in previous consults."
Fantastic office! I want to thank Matt for taking his time with me and sincere in his assistance. He spent over an hour with me for free during our initial consult. I left knowing exactly what's needed. He not only saved my house but also got rid of all my debt. They are not your typical attorneys and their creativity really allowed me to do things that other attorneys never mentioned in previous consults. Affordable and Outstanding firm and thank you for all you have done! My family thanks you!

- David K.
"We are very happy that you were able to accomplish the modification of our loan in such a short period of time. Thank you again for your professional service."
Dear Mr. Resnik: We wanted to thank you for your professional handling of our loan modification with GMAC mortgage. We are very happy that you were able to accomplish the modification of our loan in such a short period of time. Thank you again for your professional service.

- W and B Mejia
"He made me feel like I had options, all was not lost, and I could rebuild my credit."
Matt is the best bankruptcy attorney in Sherman Oaks. I consulted with Matt over a chapter 7 bankruptcy. I had issues with overwhelming credit card debt after Chase increased it's APR for no reason. It set off a chain of events that were really hurting me. He made me feel like I had options, all was not lost, and I could rebuild my credit after the 7. I had some concerns about a piece of property I was having issues with and Matt also turned out to be a real estate lawyer as well! I recommend this office to anyone who is unsure of their financial situation. It doesn't hurt to find out your options.

- Max B.
"Without the support of pro bono attorneys we couldn't do all the work we need to do, and your firm in particular is outstanding."
Thank you for your great work on behalf of Ms. Johnson. Without the support of pro bono attorneys we couldn't do all the work we need to do, and your firm in particular is outstanding.

- Skip K.
"He negotiated on my behalf with a credit card company and was able to settle with them for much lower than I could have on my own."
I worked with David Kritzer at this firm, and he was great. He negotiated on my behalf with a credit card company and was able to settle with them for much lower than I could have on my own thanks to his knowledge and expertise in the field. If you have a debtor on your back go to him to get it taken care of.

- Kelly S.
"Matt and his staff conducted themselves with professionalism throughout the whole ordeal."
I worked with Matt and his team for about a year to get through the paperwork shuffle and my personal experience was nothing short of fantastic. Legal situations have a tendency to get hairy, but Matt and his staff conducted themselves with professionalism throughout the whole ordeal. To keep it short, let's just say he under-promised and over-delivered. Rarely would I ever say this about an attorney, but overall he was just a great guy. I would not hesitate to have him on my side of the courtroom again. World market is right across the street from his office and I even decided to get his staff a thank you / holiday gift card. World market has excellent craft beer BTW, try the Einstock White Ale. They also validate parking. That just shows this isn't a fake review.

- Dean C.
"I filed bankruptcy with this firm 3 years ago and found that they are professional, friendly, and compassionate."
I filed bankruptcy with this firm 3 years ago and found that they are professional, friendly, and compassionate. I also met with their loan modification department. Unfortunately, they were unable to help because of the type of loan that I have. I really appreciated that they did not lie, waste my time, or take my money in an attempt to modify a loan that was not doable. I've since used their firm for a couple of minor issues and found all of the attorneys to be knowledgeable and considerate. Attorneys Simon and Resnik are amazing!

- Shannon J.
"I cannot thank them enough for helping save my home. I would recommend them for anyone that is thinking about filing for bankruptcy or foreclosure on their home."
I needed a bankruptcy attorney in Sherman Oaks and found Matt Resnik on Google. He has one of the best-reviewed bankruptcy law firms on Yelp so I decided to check it out his law firm for myself. I quickly found out that they are foreclosure specialists and they could help me with my issue. They made the process very easy for me and laid out my options for me. I cannot thank them enough for helping save my home. I would recommend them for anyone that is thinking about filing for bankruptcy or foreclosure on their home. They are the best bankruptcy law firm in Sherman Oaks.

- Joseph R.

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