Filing Bankruptcy For Your LLC or Business
Filing bankruptcy is a major decision that is never entered into with a light heart. For a person who has no other options when it comes to their bills that have mounted filing is the only resort that can be done. It is not only for a soul proprietor, there are many times when a single LLC or a business finds itself with no other choice other than to file for bankruptcy. When a business files for bankruptcy there are a lot of things that need to be considered and taken carefully. Here are a few of the areas that need to be heavily considered before you and your company proceed with the actions of filing a chapter 7 or a chapter 11 bankruptcy decision.
What does filing for bankruptcy as a business or LLC mean?
When you are a business or LLC and you are filing for bankruptcy it means that you are expunging the business and everything that goes along with it. This is where the company that you once held is closed down and all of the assets and things associated with the business are liquidated and sold for a profit to pay off any bills or debtors that may be waiting for their payments. It means that the business completely folds and that all of the debt accrued during the operation time of the business is folded and resolved at cost of the LLC or company.
Chapter 7 or Chapter 11
The first thing you’re going to want to know when you make the decision to file for bankruptcy for your LLC or business is the difference between fling a chapter 7 or filing a chapter 11 claim. Both of these bankruptcy decisions have unique steps that will fall in different directions depending on what you are looking for when it comes to your business and how you would most like to go through the end of your LLC or company.
When you file for a chapter seven you must first start by paying the fees that are associated with filing and petitioning the court with documentation of the assets and liabilities, notification of any leases that are going to be held in contempt and careful paperwork of all financial affairs. In the event that it is in fact a Chapter 7 filing, a trustee will be appointed who will work in the best interest of the creditors in order to liquidate the assets that belong to the LLC and company. From there, all of the creditors will be paid with the money from the liquidation and the owners of the LLC and company must then take any additional steps to resolve the business within their personal state.
Much as with a chapter seven, a chapter 11 begins much of the same way with fees and proof that the business needs to fold, that it cannot be sustained no matter what is sold off or how anyone tries. Chapter 11 however means that there is no trustee appointed to case and everything must be resolved by the creditors and the previous owners to pay all of the debit that is owned on their own without the courts stepping in to sell off any of the goods. Unlike the Chapter 7 case, once all of the debt is paid when it comes to the Chapter 11, the business can decide to emerge once again or they can terminate the company.
If the company is a smaller LLC, the process is a little bit easier since there are no major aspects that need to be fixed and filled in when it comes to filing to resolve a company. There is no one to appoint or a large disclosure statement. Instead, the company must propose a plan to file within 300 days before bankruptcy filing and then have a set out and detailed plan in the 120 days after filing for bankruptcy.
Protecting Private Assets
One of the most difficult things to come along with filing on your LLC or company is to make sure that the company does not hold any standing when it comes to your own personal finances. Making sure that your assets are not tied up in the business or LLC that you are a part of is very important. When making all of your documentation, make sure that your lawyer knows what is part of the company and what is your own. It is imperative, in order to keep your life as is, to make sure there is a line drawn between what belongs to your business and what is part of your personal belongings.
Filing bankruptcy is a difficult decision for every company and LLC who is down at the bottom of their luck and doesn’t seem to know another way out. If your company is part of this difficult decision then it is important to weigh all of your options and decide which way of filing is the best for you and your company. Look into every aspect of filing and decide if your company is something you want to open one day again or if you’re okay with letting that chapter of your life close entirely. Deceasing to file for bankruptcy is not the easiest decision for anyone, especially not for those who have put everything into their business.
With many different options and ways of guidance out there to help decide which is the best way to resolve a business, it is always important to take everything into careful consideration and find the best way that is going to benefit you and the end of your business. Carefully consider all of the choices you need to make and all of the options that are at hand before you choose the correct one for your LLC or business.
Bankruptcy is not as clean cut and easy as many might think it is. This is why it is important to do all of your in-depth research prior to making the decision to file and end your business.