Small Business Bankruptcy

What kind of business you are running. Is it a proprietorship, partnership or corporation?

Both partnerships and corporations are considered legal entities that are separate from both the partners and shareholders. These entities can file bankruptcy in their own right either under Chapter7 or Chapter 11.

However you have to be careful while filing partnership bankruptcy under Chapter 7. This because the general partners of the partnership can be sued by the trustee if the assets of the partnership are not sufficient to pay of the debts. A well-funded trustee can sue the partners so that all the creditors are benefited.
Thus you should consult a good Columbus Ohio bankruptcy lawyer before filing for partnership bankruptcy.

Proprietorship’s are extensions of the owner. They can’t file for bankruptcy alone. They can file for bankruptcy under Chapter 7, 11 or 13, provided that debts limits are met.

Which is better for the business liquidation or reorganization?

You can answer this question only if you know what caused these problems and what chance are there for change.
You should, however, be aware that reorganization of your business will not bring new markets, make up for the fit of between the skills available and those needed to run the business.

1.It would, however, free money from old debts so that you can finance your current operations.
2.It also makes it easier for you to reject contracts or leases that are not in your favor.
3.You can prevent vital cash or assets from falling into hands of the creditor.

Chapter 7, 11, 13 bankruptcy can provide your business some breathing space so that you can sell it or any other asset other than in a fire sale. The profits got from the sale can be used to pay either unpaid salaries or taxes. Once you sell the business the court could make you to use the profits of the sale to pay the creditors so that it can dismiss the bankruptcy case.

Separating the secured debt from the unsecured debt

By dividing your debt into secured and unsecured debts will give you an idea how reorganizing can help your business. For more details you should consult a good lawyer.

Do you have the will and the resources to reorganize your business?

Chapter 11 bankruptcy reorganization requires you to spend a significant amount of time in the reorganization process. During this process you should keep both the creditors and the court informed about the financial situation of your company. This must be done when the case starts and at the end of every month after that. You will have to do this in return for creditors not collecting their debts as well as other bankruptcy protections.

You also have the fiduciary duty to perform to your creditors. This requires you to keep the updated about the situation and also keep their interest above yours.

Can you start another business after liquidating this one?

Sometimes it is better to liquidate the current business entity and start a new one. However, you should consult an experienced Columbus Ohio bankruptcy attorney before doing so.