Because bankruptcy is a federal remedy and is guided by the U.S. Bankruptcy Code, the general procedures and basic legal principles for a small business bankruptcy will be largely the same in Pennsylvania as in other states. Many businesses close after a bankruptcy, but some choose to continue to operate under the terms worked out during the bankruptcy proceedings. Whether one filed a personal bankruptcy in connection with a failed business, or whether the business is still operating, both the individual and the small business will find it possible to obtain financing for starting a new business or continuing the one that is operating.
Surprisingly, a study sponsored by the U.S. Small Business Administration found that many small businesses with less than 500 employees that went into bankruptcy were rejuvenated as successful business ventures within seven years of the bankruptcy discharge. The purpose of the Bankruptcy Code with respect to small businesses in Pennsylvania and elsewhere is to give them a set of remedies that will help them pull out of financial difficulties and move forward to become successful. Chapter 11 is the usual choice for a small business that wants to remain operational during and after a bankruptcy.