Business Chapter 7

Asset Liquidation in Business Chapter 7 Bankruptcy

Smaller businesses find it especially difficult to use bankruptcy as a tool to restructure debt and equity, rationalize commitments to employees, and emerge on viable terms. The cumbersome and uncertain nature of Chapter 11 reorganization is partly responsible for the obstacles small businesses encounter en route to confirmation of a plan, but an even bigger practical factor is the general lack of access to credit.

Once a business's finances start heading down the tubes, the object is usually not so much to keep it going in bankruptcy as it is to wind it up with minimal damage to owners, employees and customers. Chapter 7 provides an effective vehicle for the liquidation of a business in an orderly way.

Call 866.439.0886 for advice about business Chapter 7 liquidation

Contact an experienced bankruptcy attorney at The Fried Law Firm in Bethesda if your company needs guidance through Chapter 7 or advice about the alternatives to liquidation. As an attorney experienced with the resolution of complex business tax and debt problems, Michael Fried is well qualified to advise you and your management team about your options in the face of business debt pressure.

Bankruptcy isn't always necessary to achieve a proper dissolution of a troubled business. Negotiated agreements with creditors, equity participants and other stakeholders can sometimes lead to a phased windup of the company's business affairs, with all assets and liabilities spoken for if not balanced out.

Chapter 7 will usually be necessary if the interests of competing stakeholders — most often secured and unsecured creditors, or a secured creditor and the IRS — can't be reconciled. Assets will go as far as they can to meet claims under the Bankruptcy Code's provisions, and the remaining claims against the corporate or partnership entity will be discharged.

But what about personal guaranties of business debt?

The main complication from the standpoint of a troubled business owner is the high likelihood of personal liability on guaranties of business indebtedness. Our goal in a business Chapter 7 case is to make sure that the liquidated assets put as great a dent as possible in the claims that a secured creditor or tax collector might be able to pursue against a guarantor or responsible person.

In some cases, it might be necessary to file multiple bankruptcies — a Chapter 7 petition for the company, and a Chapter 13 case for each individual on the hook for business debt. We can advise you about the full range of your options to minimize the fallout and spreading financial damage that might follow liquidation a business.

For additional information about the scope of our Chapter 7 bankruptcy practice for businesses, contact a knowledgeable lawyer at The Fried Law Firm in Bethesda.