What to Know If You Are a Business Owner Filing for Bankruptcy
If you are a business owner who has decided to file for bankruptcy, you may be wondering how and if it will affect your company. Will you have to sell your business or close your doors? Will your assets be seized to pay creditors? The answer to these questions will depend on the nature of your business, how it is structured, whether it is profitable, and the type of bankruptcy you file.
At Riverwest Law Firm, our bankruptcy attorneys can help you understand your rights and responsibilities when filing. We proudly serve communities throughout Milwaukee and Waukesha Counties, including Riverwest and Harambee. If you are considering filing for bankruptcy in Milwaukee or the surrounding area, contact our office at (414) 369-2390 to schedule a free, confidential consultation.
Will I Be Able to Keep My Business If I File for Bankruptcy?
Whether or not you will be able to continue to operate your business after filing for bankruptcy will depend on a number of factors.
Factors that may affect your ability to keep your business after filing for bankruptcy include:
- The nature of your business
- If your business is profitable
- The structure of your business (sole proprietorship, corporation, partnership, etc.)
- The type of bankruptcy you file
In order to determine what type of bankruptcy you should file, you need to speak to an attorney. There are several things that need to be considered to determine whether you should file Chapters 7, 11, or 13. An attorney can help you understand how each type of bankruptcy will affect your business and whether it will help you achieve your financial goals.
How Will Filing for Chapter 7 Bankruptcy Affect My Business?
Filing a Chapter 7 bankruptcy will likely have the deepest impact on your business since it is a liquidation of your assets. A bankruptcy trustee may require you to stop operating your business, at least temporarily, while they determine the value of your assets.
Both individuals and businesses may file Chapter 7. However, few businesses choose this option. Sole proprietors that provide a service and have limited or no assets, and do not take on additional debts can usually continue to operate.
Can I File Chapter 13 Bankruptcy as a Business?
Chapter 13 bankruptcy is generally only for individuals, but a sole proprietor may be able to include business debts when filing. Unlike Chapter 7, Chapter 13 is a reorganization of debt instead of a liquidation of assets. Debt is restructured, and creditors are paid through a repayment plan.
Will I Lose My Business If I File for Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is for businesses that need to restructure their debt in order to keep their doors open. Partnerships, corporations, and LLCs must file a Chapter 11 bankruptcy instead of a Chapter 13 bankruptcy, although they work similarly. A business's debts will be reorganized, and creditors are paid back through a repayment plan. Businesses are generally allowed to remain operational under a court-appointed trustee.