Should My Business File For Chapter 11 Or Chapter 7 Bankruptcy?
When your business is struggling financially, the prospect of business bankruptcy may have arisen. Whether you own a sole proprietorship, you are a member of a limited liability company (LLC), you are a partner in a partnership, or you are one of the owners of a corporation, you could be eligible to file for bankruptcy. However, the different types of business bankruptcy can have very different outcomes for businesses. Reorganization bankruptcies allow businesses to remain in business, continuing to serve customers or clients and to earn a profit while repaying debt over a period of time. Differently, liquidation bankruptcies require the business to close down and for assets to be liquidated so that creditors can be repaid. Should your business file for Chapter 11 bankruptcy or Chapter 7 bankruptcy? It really depends on the circumstances and the details of your business, and in some limited situations, a business also may be able to file for Chapter 13 bankruptcy. Our West Palm Beach bankruptcy lawyers can provide you with assistance. In the meantime, as you are considering bankruptcy, you should ask the following questions to help determine the type of bankruptcy that is most appropriate for your business.
Do You Anticipate That Your Business Profits Will Pick Up in the Future?
If you expect that your business’s profits will pick up in the future — and you have experienced a temporary downturn for a knowable reason — a reorganization bankruptcy under Chapter 11 could be beneficial to you.
Can You Cut Certain Costs While Continuing to Run Your Business?
Even if you do not anticipate a significant increase in business profits, can you cut costs to get your finances in a healthy place? If not, you will likely need to consider Chapter 7 bankruptcy instead of Chapter 11 bankruptcy.
Are You Prepared to Close Your Business?
Finally, if you are prepared to close your business? If not, you will need to file for a reorganization bankruptcy as opposed to a liquidation bankruptcy.
Is Your Business a Sole Proprietorship?
Finally, is your business a sole proprietorship? The answer to this question will not affect whether you file for Chapter 7 or Chapter 11 bankruptcy, but it is important to keep two important things in mind when a sole proprietorship is considering bankruptcy. First, a sole proprietorship may be able to go through a reorganization bankruptcy through a Chapter 13 filing (which can be less complex and less expensive than a Chapter 11 case). This brings us to the important second point to consider, which is that a sole proprietorship bankruptcy is also an individual or consumer bankruptcy — the business owner and the business are the same entity for bankruptcy purposes. As such, if the business files for bankruptcy, the owner will be required to include all personal assets and debts in the case.
Contact Our West Palm Beach Business Bankruptcy Attorneys Today
Is your business considering bankruptcy? Business bankruptcies can be extremely complex, and it is essential to discuss the details of your case with an attorney who can help. One of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller can talk with you today to learn more about the financial aspects of your business and to provide you with more information about filing for Chapter 7 or Chapter 11 bankruptcy.