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Small-Business Bankruptcy Options

Business debt requires separate analysis of the legal entity, owners, guarantees, collateral, taxes, payroll, leases and operational prospects. A business and its owner may not have the same bankruptcy options or discharge rights.

When this service may be relevant

A sole proprietor may address business obligations in an individual Chapter 7 or Chapter 13 case if eligible. Corporations and limited liability companies have different considerations. Chapter 11, including provisions designed for qualifying small-business debtors, may be evaluated when reorganization is realistic.

What counsel should review

Entity structure and ownership.
Personal guarantees and co-obligors.
Accounts receivable, inventory, equipment and liens.
Payroll, sales, trust-fund and income taxes.
Commercial leases, vendor contracts and pending lawsuits.
Cash flow, shutdown costs and the feasibility of continued operations.

Important limits and timing

Chapter 7 does not give a discharge to a corporation or partnership. Closing, transferring or selling business assets before legal review can create serious problems.

Should the business file, the owner file or both?

That depends on the entity, guarantees, assets, goals and available chapters. Separate analyses are often necessary.

Related bankruptcy guidance

Case Evaluation | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy

See every option on the Bankruptcy Services hub and find local information on the Madison County service-areas hub.

Request a consultation

Call (256) 221-3387 or contact Huntsville Bankruptcy Lawyer. Do not wait on a sale, hearing, response, garnishment or repossession deadline.

Official source

General federal information: U.S. Courts bankruptcy guidance.

Attorney advertising. This website provides general information, not legal advice. Contacting Huntsville Bankruptcy Lawyer does not create an attorney-client relationship. Representation begins only after conflicts review and a written engagement agreement. No result is promised.