Every business is vulnerable to poor market conditions, cash flow issues, and strategic errors, which may force even thriving companies to close their doors. Whether you’re considering going out of business entirely or looking for a way to restructure your debts, commercial bankruptcy law provides a variety of options to streamline the process and help you achieve your goals. Below are a few facts business owners should understand before filing for bankruptcy.

A Brief Guide to Commercial Bankruptcy Law

1. Choosing Between Liquidation & Restructuring

Like private borrowers, businesses may also file for chapter 7 bankruptcy, in which the company’s assets may be sold to pay back creditors. This option may be especially attractive to sole proprietors, who may otherwise be held personally responsible for their business debts. If you believe you could continue operating, a chapter 11 or chapter 13 may allow you to restructure your debt, reducing payments and enabling you to stay in business.

2. How the Form of Your Business Affects Your Options

Commercial bankruptcy law limits the types of bankruptcy different legal entities can pursue. For instance, while any business can file for chapter 7 protection, discharging debts may function differently for corporations than sole proprietorships. Chapter 13 bankruptcy is also limited to those operating under their own name, while corporations and partnerships will have to restructure under chapter 11.

3. Your Liability After Bankruptcy

Unlike personal bankruptcy, debts left over after the business assets are sold are not discharged if you run a corporation or sole proprietorship. While corporations are considered separate legal entities, creditors may still file a suit against the shareholders, so it’s important to have skilled legal representation before filing a petition.

For 20 years, the Anderson Law Firm has helped High Point, NC, business owners navigate the complexity of commercial bankruptcy law. If you’re deeply in debt, their team of legal professionals will identify all of your options and help achieve the best possible result in even the most difficult situations. Visit their website or call (336) 431-7336 to schedule your initial consultation and follow their Facebook for more advice and legal tips.

The information contained in this site is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved. We are a Debt Relief Agency. We help people file for Bankruptcy Relief under the Bankruptcy Code.