Small business bankruptcy options
Determining your small business bankruptcy options is a complex question. If you are trying to decide whether to file a bankruptcy, we encourage you to come in and meet with us. Each business is unique, and getting good legal advice requires talking about your company, reviewing your profits and losses, and discussing your performance expectations for the future. We make it a priority to give you legal advice that is tailored to your small business because we know that your company is important to you.
Here are some questions you need to ask if you are considering small business bankruptcy options:
Is the small business a corporation, a partnership, or a proprietorship?
* Corporations, limited liability companies and partnerships are legal entities separate from their shareholders or partners. They can file Chapter 7 in their own right without the partners or shareholders filing for bankruptcy.
* Partnerships are just an extension of the owner. As a result, a partnership can’t file bankruptcy without the owner/proprietor filing bankruptcy. This is because the assets and the liabilities of the business belong to the proprietor. Depending on the circumstances, the owner may file a Chapter 7, Chapter 11 or Chapter 13.
Should you reorganize or liquidate?
To answer this question, you need to know the source of your financial problems, as well as the prospects for change.
* Reorganization allows you to reject leases or contracts that are no longer advantageous (for example and expensive facility lease or a poor equipment purchase). Reorganization can prevent more money from going to creditor collection actions so that you can invest it back into your business and in turn improve your current operations.
* Reorganization can’t create a market where it doesn’t exist, nor can it increase gross revenue, or make up for poor management of the business.
What about a Chapter 13 or Chapter 11?
Chapter 7 liquidation and reorganization are at the opposite sides of the spectrum. If these aren’t the right fit for your business, you may qualify for a liquidating Chapter 13 or Chapter 11. These could provide the breathing space you need in order to sell the business or some of its assets/inventory, freeing up some money to pay taxes, unpaid salaries and other outstanding debts. The bankruptcy could then be converted to Chapter 7 or dismissed entirely if bankruptcy protection is no longer needed.
Your company is important. Meeting with an attorney and discussing your unique situation is the best way to weigh your bankruptcy options. Call us today to schedule a free consultation you will meet with Paul .