Is your small business experiencing financial challenges? Are you thinking about filing for bankruptcy protection for your business? Here are some of the things you need to consider when evaluating bankruptcy as an option:
- Are you personally liable for the debts of your business?—This will depend on what legal structure you chose when you formed your business and what debts you have personally guaranteed. If your business is a sole proprietorship or a partnership, you’ll have personal responsibility for the business obligations. On the other hand, if you set up the company as a corporation or a limited liability company, you may be able to discharge or restructure business debt without any impact on your personal finances. If you are personally liable for the debts of the business, a business bankruptcy filing won’t be of benefit to you. Almost universally, “business” credit cards are issued in the name of the owner as well as the business and remain a personal obligation.
- Do you want to discharge debt or restructure debt?—With a small business, you can file a Chapter 7 bankruptcy petition for the business. This will not discharge the business from debts but willcreate a public and court-structured shut-down of the business. Often, a personal bankruptcy of the owner is needed for you to permanently rid yourself of certain debts (taxes are extremely difficult to discharge) while keeping some of your property. On the other hand, a corporation or LLC can restructure debt with a Chapter 11.
- Do you want to try to save the business or do you simply want to wind it down? If you’re trying to save the business, you may be more interested in restructuring your debt, as you may need to continue to work with your vendors.
- A restructuring should be undertaken only after careful advance planning. It is never too soon to explore this option. In the right situation, a Chapter 11 or other restructuring has benefits, but the chances of success depend on having a well-formulated plan and a willingness to pay the costs, financial and otherwise, of the process. Consult with a qualified and experienced bankruptcy attorney to consider this process, early on.
Contact Neuner & Ventura, LLP
We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura 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 attorney. Evening and weekend appointments are available upon request.
Representing Clients across South Jersey