By Ryan C. Wood
If you own a business, sole proprietor, a corporation or an limited liability company you can still file a personal bankruptcy case or a small business bankruptcy. There are a number of issues to address and this article touches on some of the most common. Speak with an experienced bankruptcy lawyer in your jurisdiction for more information. Different jurisdictions do have different practices.
In the Northern District of California when filing a chapter 7 bankruptcy, just like many other jurisdictions, the trustee assigned to your case can take over the business and operate it. It is rare though. If the business is worth quite a bit of money and is making money you most likely do not need to file bankruptcy anyway. The value of the business and the business assets are an issue that needs to be discussed at length. Valuing a business can be very difficult and there are a number of different ways to determine a value.
For sole proprietors the filing of a Chapter 7 case should be the least complicated. Assuming the business does not have significant assets and the income it is producing is not very much filing a Chapter 7 bankruptcy should not be too complicated. The California Wild Card exemption should be enough to protect the assets along with the tools of trade exemption.
If you own a corporation or limited liability company it becomes more complicated given that you are separate legal entities. If the only owners are you or your spouse and you are taking a distribution or income you should have w-2’s to document your income. Again the valuation becomes an issue.
If the value of your business is somewhat significant and it is producing decent income a Chapter 13 bankruptcy may be the best choice to allow you to continue to operate the business and get rid of some or all of your debts depending upon the circumstances of course. In a Chapter 13 a liquidation analysis must be made and if your business is worth more than what can be protected then that is your obligation to your creditors. The obligation is paid over three to five years in the chapter 13 plan of reorganization. Again, this is article touches on basic concepts regarding filing bankruptcy when you are operating a business or own a corporation or limited liability company. Please consult a bankruptcy attorney in your jurisdiction for more detailed information about your specific circumstances.