Business bankruptcy might offer a solution if your business is struggling financially. Here are some of the questions George Hoselton a Portland, Oregon, bankruptcy attorney is frequently asked by small business owners. Every case is different and requires a consultation for accuracy.
To eliminate or reorganize the accumulated debts that are suffocating the otherwise good business.
As a general rule, Chapter 13 bankruptcy is reserved for debts owed by an individual and not by a business operated as a legal entity, such as a corporation or limited liability company. Sole proprietorships and some partnerships can file Chapter 13 because the debts of the business are actually owed by the owners. A consultation with a bankruptcy lawyer could offer guidance if you are personally liable for business debts.
The owners of a corporation are its shareholders, but Oregon grants corporations status as legal entities separate and apart from their owners. A corporation filing a business bankruptcy would not, under most circumstances, affect the personal assets or debts of its shareholders. However, if you personally guaranteed a corporate debt, the bankruptcy filed by the corporation would not prevent creditors from seeking payment from you or from going after your personal assets.
The filing of a bankruptcy triggers an automatic stay of collection efforts by creditors until the bankruptcy is completed or the stay is removed by the court. The stay takes effect on the filing of the bankruptcy petition.
In reorganizations, the stay is essential to the continued operation of the business. For example, if you operate a retail business, you must be able to sell its inventory of merchandise in order to generate revenue. The seizure of your inventory by a creditor could put you out of business, but the automatic stay in a reorganization bankruptcy could prevent the loss of the inventory.
Every case is different, in some cases if the court approves or confirms the reorganization plan filed for the business by your Oregon bankruptcy lawyer, the business will repay its creditors according to the terms of the plan and continue its operations.
Failure to present an acceptable plan or to make the required payments could lead to dismissal of the bankruptcy or to its conversion to a Chapter 7. Your bankruptcy attorney would be your best resource for guidance in such a situation.
If you have additional Chapter 7 Small Business Bankruptcy questions and live the in the Portland, Beaverton or Bend Oregon areas please contact George Hoselton at (503) 766 – 5810.
Disclaimer: The Law Office of George Hoselton does not file chapter 11 cases.