We all want a “do over” at some point in our lives. That applies when you own a business. Sometimes, you can’t really learn exactly what you need to be successful until you’ve failed. The best approach may often seem to be a “do over”—close down the business, take what you’ve learned and start over again. That’s possible, but there are some caveats that you must be aware of if you want to avoid legal problems. Here are some recommendations to minimize your risks when you want a second bite at the apple.
Keep the Businesses Completely Separate
You want to avoid carrying anything over from the first business to the second, other that the knowledge you gained from the first business. Don’t set up operations in the same location, unless it’s absolutely necessary. Don’t use equipment or assets from the first business in the second one unless you pay for them (and pay fair market value). Be careful that the contacts and customers established through the first business are not the principal or primary customers and contacts in the second business. The more you have in common between the businesses—product, customers, assets and location—the more likely creditors will argue that it’s essentially the same business (even if you set up a completely new legal entity).
Work for Someone Else for a While
This may be the best advice you can get. If there’s sufficient time between the operation of your businesses and if you’re working for someone else during that time, you have time for the dust to settle from the closing of the first business.
Contact Neuner & Ventura, LLP
At Neuner & Ventura, LLP, we know that the bankruptcy process can be intimidating and confusing. We offer a free initial consultation to every client. If you are closing a business, you need the best bankruptcy lawyer. Call our office at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another bankruptcy attorney. Evening and weekend appointments are available upon request.