SMALL BUSINESS BANKRUPTCY
CHAPTER 7 BUSINESS BANKRUPTCY
If your business is not generating enough revenue to meet it's monthly obligations, Chapter 7 bankruptcy may be appropriate for your business. It becomes difficult to continue running the business when collectors are pursuing business assets or a lawsuit is filed against the business which creates further economic hardship. Before filing for Chapter 7 bankruptcy for the business, the business must decide to close. Once Chapter 7 bankruptcy is filed, it can no longer operate.
Owning your own small business requires hard work and personal sacrifice, including financial investment. Small business owners commonly co-sign, provide collateral or most commonly sign personal guarantees for business loans. Unfortunately, if the business fails or has financial difficulties, it is most often the owner who is ultimately held personally responsible. Therefore, for many failed small businesses, it is the owner that needs the protection from the bankruptcy court, not the business. In these cases, the Law Offices of Michael Schwartz will look for ways to best protect the owners of the business through bankruptcy or other alternatives.
Among other types of debt, bankruptcy can be used as a tool to manage small business debt including business leases, paycheck protection program loans (PPP Loan), Small Business Administration Loans (SBA Loans), EIDL Pandemic Loans, vender liability, business lines of credit and merchant services financing.
A Chapter 7 small business bankruptcy is a good way to ensure that all creditors are all notice that the business is no longer operating. Once the case is filed, they will no longer be able to collect against the business. If the assets are liquidated, a Chapter 7 business bankruptcy can be used to pay creditor liabilities. If after distribution of assets to creditors there exists additional debt that was personally guaranteed, the business owner may still be liable for business debt. In these circumstances, it may be necessary for the business owner to seek personal bankruptcy protection.
CHAPTER 7 BUSINESS BANKRUPTCY PROCESS
When a business files for Chapter 7 bankruptcy, a Trustee is appointed to oversee the case. Any assets of the business become property of the bankruptcy estate and will be liquidated and used to help satisfy the business debt. The Trustee will look to sell assets and distribute the company assets to the creditors of the business. As part of the process, the Trustee will request financial documents of the business and will secure the assets/ inventory of the business.
A 341 Meeting of Creditors will be held. During that time, the Trustee will ask the business owner questions to establish the extent of any assets that can be used to help repay the debt to creditors. If assets are identified, they may be sold at auction with the proceeds used to pay creditors of the business.
At the Law Offices of Michael Schwartz, we are dedicated to protecting your personal finances from y our business's financial difficulties. Make Michael Schwartz your bankruptcy lawyer near me!