Does My Business Have to Liquidate Assets in Bankruptcy?
Many people assume that any type of bankruptcy filing involves the liquidation of assets. Indeed, it is a common myth or misconception that any kind of bankruptcy will involve losing all personal and/or business assets. In fact, there is no type of personal bankruptcy in which all of an individual’s assets will be liquidated since many assets are exempt from liquidation in a Chapter 7 case under Florida state or federal law. Then, there are commonly filed reorganization bankruptcy cases in which a business does not have to anticipate the liquidation of any assets. An experienced West Palm Beach bankruptcy lawyer at our firm can provide you with detailed information about whether your business will need to liquidate assets in a bankruptcy case.
Only Liquidation Bankruptcies Require the Liquidation of Assets
If your business is filing for bankruptcy, you should know with certainty: under US bankruptcy law, your business will only be required to liquidate its assets if your business files for Chapter 7 bankruptcy. Otherwise, reorganization bankruptcies do not require asset liquidation.
To be clear, if your business files for Chapter 7 bankruptcy, it will need to close, and business assets will need to be liquidated. (It is important to emphasize that Chapter 7 bankruptcies work a bit differently for businesses than for individuals — individuals can exempt a range of assets from liquidation.) However, if your business files for any type of reorganization bankruptcy, business assets will not need to be liquidated. In addition, your business can continue operating and can restructure debt.
Types of Business Bankruptcies Where Liquidation Does Not Occur
There are several types of reorganization bankruptcy that businesses in South Florida may be eligible to file for. Eligibility will depend on the structure of your business, the type of business your company does, the amount of debt your business has, and other potential factors. Depending on those factors, your business could be eligible for the following types of reorganization bankruptcy, none of which require a liquidation of business assets:
- Chapter 11 bankruptcy (a common form of bankruptcy for businesses of all types);
- Subchapter V (a specific type of Chapter 11 bankruptcy that is less complex and less costly, for smaller businesses with a limited amount of debt);
- Chapter 12 bankruptcy (a kind of bankruptcy specifically for family farmers and fishermen); and
- Chapter 13 bankruptcy (this is a type of individual bankruptcy, but a business owner who is a sole proprietor can often file for Chapter 13 bankruptcy with a sole proprietorship).
Contact Our West Palm Beach Bankruptcy Lawyers
The differences between Chapter 7 and Chapter 11 bankruptcy for a business are vast, and it is important to understand that there are bankruptcy options that do not involve the liquidation of any business assets. To find out more about a potential Chapter 11 case (or another type of business bankruptcy) for your company, do not hesitate to get in touch with the experienced West Palm Beach bankruptcy attorneys at Kelley, Fulton, Kaplan & Eller for assistance. We represent businesses in a wide range of bankruptcy cases, and we can speak with you today about the particular circumstances of your company and your options moving forward.