At the Sasser Law Firm, our board-certified business bankruptcy attorneys have more than 20 years of experience helping small and large companies through the bankruptcy process. We can help you assess your situation and goals to determine whether filing for Chapter 11, Chapter 7, or Chapter 13 bankruptcy is an option for you.
Filing for bankruptcy can provide businesses with:
- Temporary protection from creditors
- A chance to negotiate with secured creditors
- Time to liquidate assets
- Time to pay back priority tax obligations
- A chance to significantly diminish unsecured, non-priority debt
Schedule a free consultation with our North Carolina business bankruptcy lawyers today. Our law firm has helped more than 8,500 businesses and individuals obtain the clean slate they need to once again be successful.
Types of Bankruptcies for Businesses
Our skilled business bankruptcy attorneys will assess your case and discuss your goals to help you determine the right path for your company. Typically, companies file for either Chapter 11 or Chapter 7 bankruptcy, depending on whether they want to reorganize and remain in operation or liquidate all their assets and shut their doors. If the business is a proprietorship, it may be possible to reorganize utilizing Chapter 13.
Here are some factors to consider when comparing the different types of business bankruptcies:
Chapter 11 (Business Reorganization)
- Chapter 11 bankruptcy temporarily stops creditor collection actions such as foreclosures, levies, lawsuits, and evictions.
- Debtors may propose alternative treatments for paying existing debt, such as altering interest rates, lengthening payment terms, and reducing principal balances.
- Debtors control the sale of assets.
- Creditors are prioritized into different classes to make a plan for realistic repayment.
- Businesses receive at least five years to pay off tax debt.
- Filings can be done on an emergency basis when needed.
- Companies re-emerge in a manageable financial situation.
- Business owners may decide to file for Chapter 7 as an orderly and structured way to liquidate under the Court’s protection.
- The distributional scheme of the Bankruptcy Code may be more advantageous than would otherwise be the case.
- The Bankruptcy Code may allow for the recoveries of certain transfers that may result in a more advantageous distribution.
- Our attorneys can help you decide which entity or entities might benefit from a filing.
Chapter 13 (Personal Reorganization)
- Chapter 13 allows for a proprietorship to be reorganized.
- A principal of a business who has incurred personal debt to capitalize the business or to fund personal expenses while a business struggles can use chapter 13 to restructure personal debt.
- Chapter 13 consolidates, restructures and often reduces debt into monthly payments.
- Payment plans can last three to five years.
Filing for bankruptcy may not be the best option for every business owner. Our dedicated business bankruptcy attorneys will be upfront with you about your options, including whether you should consider making out-of-court agreements with creditors. Contact our law firm today to get started with a free consultation.
Steps for Filing for Business Bankruptcy
Filing for business bankruptcy begins with a thorough assessment of your financial situation. Our knowledgeable attorneys will sit down with you to review your income, assets, liabilities, and expenses, and we will work with you to set realistic goals for your business.
Although the steps for filing for bankruptcy will depend on whether you file for Chapter 11, Chapter 7, or Chapter 13, in general, you can expect:
- Your attorney will file a bankruptcy petition with the court. This will trigger an “automatic stay,” which will protect your business from creditor action while you work through the bankruptcy process.
- Your attorney will work with you to file the required schedules outlining your business assets, liabilities, etc.
- In Chapter 11 cases, you will turn in a business reorganization plan. In Chapter 13 cases, you will file a personal repayment plan.
- What happens next will depend on what type of bankruptcy you filed. In Chapter 7 cases, a trustee will begin liquidating your assets. In Chapter 11 and 13 cases, your reorganization or repayment plan will be reviewed by creditors and the court.
- If you are reorganizing under Chapter 11 or Chapter 13, your plan may be confirmed and your debt discharged by the court. Your business can emerge on stable financial footing.
- If a Corporation or LLC is liquidating under Chapter 7, a trustee will be appointed to liquidate assets and distribute funds. If there is personal liability for business debt then a personal bankruptcy filing may be an option to consider as well.
If your business is in trouble and you’re trying to figure out the best course of action, contact our law firm today. Our seasoned legal team will review your case for free to help you weigh your options.
Are You Personally Liable for Business Debt in Bankruptcy?
Many of the small business owners we work with are under serious financial stress, and they worry about not just their company’s future but also their personal finances.
Your personal liability in a business bankruptcy will depend on how your company was set up:
- If your business is a corporation or an LLC (limited liability company), it is a separate legal entity from you. This means you are not personally liable for business debts. However, there are certain situations under which a business bankruptcy could affect you personally, such as if you signed a personal guarantee on a business debt, offered personal property as collateral, or used a personal loan to help your business.
- If your business is a sole proprietorship (owner as debtor), you and your business do not have separate legal identities. This means you are personally responsible for any debts your business owes.
- If your business is a partnership, it is considered a separate entity from the individual partners. However, partners may still be personally on the hook for debts not paid by the business.
When you sit down with our knowledgeable business bankruptcy lawyers, we will discuss in detail your personal liability for your company’s debts. We can advise you on whether you should file for personal bankruptcy as well as business bankruptcy, with the goal of devising a strategy that fits your overall financial goals.
Talk to a Knowledgeable Business Bankruptcy Attorney Today
Whether you are facing a financial crisis or just want to talk through your options, the board-certified bankruptcy lawyers at the Sasser Law Firm are here to help. We provide you with a highly informative, low-pressure environment where you can get answers to all your questions without obligation.
When you meet with our firm, you will be talking directly with an experienced attorney, not handed off to a paralegal or assistant. We take the time to get to know your situation and understand your goals. We feel that our job is to do what’s best for you, and that includes steering you away from bankruptcy if we think there is a better alternative.
Schedule a free consultation with our business bankruptcy lawyers today to talk about the future of your company and how we may be able to help. Our law firm works with small business owners and larger companies throughout North Carolina, including in Wake, Harnett, Johnston, Durham, Orange, Granville, Vance, Franklin, Warren, Nash, Lee, Chatham, and Moore counties. Contact us now to get started.