Understanding how liquidation can affect your business goals
Liquidating your small business is a serious step that demands a great deal of deliberation. In many cases, liquidation under Chapter 7 is a prelude to the dissolution of the business as a whole. In some cases, however, Chapter 7 can be an effective means of resolving debt and giving certain small businesses a fresh start. Whichever goal you have in mind, our Woodland Hills chapter 7 attorneys at the Law Offices of Michael H. Raichelson can help you determine if Chapter 7 is a necessary or advisable step and, if so, can help you use the process to your maximum benefit.
Chapter 7 for businesses that are winding up
The vast majority of companies that file for Chapter 7 do so intending to cease doing business. This is because Chapter 7 essentially requires a business to turn over all its assets for liquidation. Filing for Chapter 7 is not the same thing as dissolving your corporation, LLC or other business entity. That requires a separate process under California law. Filing for Chapter 7, however, can prevent creditors from coming after you and other stakeholders personally, once your business is wound up. A Chapter 7 bankruptcy lawyer in Encino and Sherman Oaks can help you determine if this is necessary and advisable.
Chapter 7 for businesses with low capitalization
In most cases where your intent is to have your business survive bankruptcy, Chapter 11 is the better option. There are, however, a few situations where Chapter 7 may be useful for resolving business debt:
- If you operate as a sole proprietorship or partnership, you may be personally liable for your business's debts. Filing for Chapter 7 personally can resolve these debts while stopping collection actions and foreclosure. Once these debts are resolved, you can resume your prior business as the same entity or form a new entity.
- If you operate as a corporation, LLC or other limited liability entity, you can file for Chapter 7 on behalf of that entity. If your business has little in the way of assets or if it can do business without assets, it may be able reopen after filing for Chapter 7.
Chapter 7 for small business debts or even personal debts from the operation of a partnership or sole proprietorship is significantly more complicated than its personal and consumer debt counterpart. Therefore, it is imperative that you speak to an experienced small business bankruptcy lawyer in Northridge or Van Nuys before settling on Chapter 7 for your business.
Call us to discuss your options for small business bankruptcy
How you manage business debt today can have a huge impact on your company for years to come. With more than 18 years of experience in all aspects of bankruptcy and debt management practice, Raichelson Law, P.C. can help you understand your options and plot the best course for the future of your business. Call our office today at 818-444-7770 or contact us online to schedule a no-obligation consultation with one of our highly qualified attorneys.