Our business bankruptcy practice helps businesses with all of their debt and insolvency needs in Chapter 7 and 11. David is a certified specialist in bankruptcy law and has a background in finance and accounting. The combination of those disciplines give him the ability to comprehensively evaluate complex business situations to determine if bankruptcy is the best solution, and if so, recommend what type would best pertain to the situation.
Corporations have the option of walking away from and closing their businesses in Chapter 7 or attempting to reorganize their debts in Chapter 11. Given the costs both in terms of time and money, most small corporations opt for Chapter 7. Sometimes it may make more sense to not file bankruptcy on the corporate level especially if the owner has signed multiple personal guarantees. Timing is also a key variable. David can assist with a schedule and strategy on when to close the doors, terminate employees, deal with lines of credit, including SBA loans and EIDL loans.
What do you do next?
David would like a business bankruptcy questionnaire to be filled out. Send it back to our office and David will personally go over it with you and discuss the best options for your company.
Normally a business bankruptcy will take about 2-3 months. Most of the
work will be preparation for the filing and the first month after the
filing. It could be longer if there are
assets for the bankruptcy trustee to liquidate.
Yes, a sole proprietorship can file for either a chapter 7 or chapter 13
but a corporation can only file a chapter 7 bankruptcy or if needed, a
reorganization chapter 11 bankruptcy.
On the day of the bankruptcy filing, the business owner must transition
away from operating the company to providing documents and information about
the company to a bankruptcy trustee.
Yes, all operations must cease on the bankruptcy filing in a Chapter 7. No checks can be written and no product shipped. In a reorganization Chapter 11, the business can continue operations under court monitoring.
If you personally guaranteed a business loan or other obligation, filing for business bankruptcy does not eliminate or discharge your responsibility for the business loan. Since you personally guaranteed the loan, you will still be responsible for it even after the business files for bankruptcy relief. In these circumstances, it may be necessary to file for personal bankruptcy.
prevent the landlord from taking over possession unless the landlord had already received a judgment for possession before the bankruptcy case was filed.
A bankruptcy chapter 7 trustee is immediately appointed upon filing and will quickly investigate the status of the company. The trustee essentially steps into the shoes of the former company and is able to access accounts, collect receivables, sell property and possible make distribution payments to general unsecured creditors.
Before the case is filed, the board of directors of the corporation will make a resolution appointing the president or similar officer as the representative of the company. The resolution will also authorize the company to file for bankruptcy relief.
Once the bankruptcy case is filed, the representative of the company must make all books and records available to the bankruptcy trustee, including, but not limited, to Quickbooks files and banking records.
The SBA loan may be personally guaranteed and the SBA may have a prime lien on all assets of the business. A thorough investigation needs to be done before the case is filed. If there is a prime lien by the SBA or any other secured creditor, it is very unlikely that the bankruptcy trustee will take any actions to collect or sell the collateral.
(Our office has no control over the date or time) Approximately 20 to 40 days after your filing date—the court will mail a letter to you with the exact date & time.
All meeting of creditors will be via Zoom. You will get instructions about it.
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