Chapter 11 vs. Chapter 13 for Louisiana Business Owners
A corporation or LLC cannot file Chapter 13; it generally must consider Chapter 7 or Chapter 11. An individual business owner may qualify for Chapter 13 if current eligibility rules are met, while Chapter 11 may be available to individuals and business entities.
Who May File Each Chapter
Chapter 13 is limited to eligible individuals with regular income, including qualifying sole proprietors. Partnerships, corporations, and LLCs do not file Chapter 13. Chapter 11 can be used by operating entities and qualifying individuals.
Debt Limits and Eligibility
Chapter 13 and Subchapter V have statutory debt limits that are periodically adjusted. Chapter 11 outside Subchapter V does not use the same small-business ceiling. Eligibility should be evaluated using debts as characterized on the filing date.
How the Plans Differ
Chapter 13 uses a statutory repayment-plan structure administered by a standing trustee. Chapter 11 involves disclosure, voting, and confirmation rules, with streamlined variations for Subchapter V. A business entity’s need to retain operations and address contracts may make Chapter 11 the relevant framework.
Personal and Business Obligations
Sole proprietors do not have a separate legal entity between the owner and business. Owners of an LLC or corporation may still face personal guarantees, tax obligations, or other individual liabilities even when the entity files its own case.
Frequently Asked Questions
Can my LLC file Chapter 13?
No. Chapter 13 is for eligible individuals, not LLCs or corporations.
Can an individual file Chapter 11?
Yes. Individuals may file Chapter 11 when it is appropriate and statutory requirements are met.
Related Bickham Law Resources
Learn more about Chapter 11 bankruptcy, business reorganization, Subchapter V, and continued business operations.
Request a Free Consultation
Call Bickham Law at 504-584-5730 or request a free consultation. Our office is located at 650 Poydras Street in New Orleans.
This article provides general information and is not legal advice. Outcomes depend on current law and the facts of each case.