Small Business Liquidation and Chapter 7 Bankruptcy
For many individuals with an ownership interest in their businesses, business debts can be just as important as personal debts and just as vulnerable to financial distress in times of economic uncertainty. The Chapter 7 bankruptcy process is typically used as a mechanism to discharge significant amounts of personal debts, but can also be advisable for businesses under certain circumstances.
At the Russell Van Beustring P.C., our legal team is dedicated to helping individuals and businesses that are struggling financially to utilize the tools available through the bankruptcy system to their benefit. We can guide you through the process of filing and completing a Chapter 7 bankruptcy case for your small business. To learn more about your legal options, call today at 713-973-6650.
Bankruptcy and Different Business Entities
Chapter 7 bankruptcy applies to different business entities in different ways, and can be used either as a tool for liquidation or a means of discharging debt.
- Sole Proprietors – A sole proprietor is not a separate legal entity from the owner, and as such cannot file for bankruptcy as a business. Instead, a Chapter 7 bankruptcy filed by the proprietor will include the business debts for which they are personally responsible.
- Partnerships – Partnerships can file a Chapter 7, but cannot receive a discharge of debt. Instead, the trustee will close the business, and liquidate and sell the business’s assets in order to pay its debts. Any remaining debt may be the responsibility of partners depending on their liability status.
- Corporations and LLCs – Much like partnerships, Corporations and LLCs can file for Chapter 7 but not receive discharges, meaning the primary benefit is placing the responsibility for liquidation on the bankruptcy trustee.
Managing catastrophic business debt can be extremely daunting, but Chapter 7 offers a means to effectively and efficiently liquidate business assets with little hassle for the owners. For a free consultation with an experienced Houston bankruptcy lawyer from the Russell Van Beustring P.C., do not hesitate to call 713-973-6650 today.