Of course, the outcome and routes to get there vary depending on a variety of factors, and having a skilled business bankruptcy lawyer by your side to effectively analyze your business, finances and possible routes to recovery is your best bet.
Sole Proprietorships Have It Tough
If you are a sole proprietor filing for bankruptcy, the trustee may require the business be shut down so they can conduct an audit of the bankruptcy estate and associated assets to determine the overall value. For sole proprietors, however, bankruptcy does not always mean an immediate shut down – it depends on who you are in relation to the business, associated assets and how the business can be expected to perform during the course of the bankruptcy.
For example, businesses without additional assets, like freelancers, vendors or consultants may be allowed to keep their doors open throughout the bankruptcy process. Especially when it is evident further debt will not accumulate and the risk of incurring a legal liability is low for the business, they may continue to operate. A good business bankruptcy lawyer will be able to help you determine how much of your business operations will need to change during bankruptcy.
Keep in mind, though, that any proceeds the business generates while under bankruptcy – including past-due collections paid after the bankruptcy was filed – become a part of the bankruptcy estate.
LLCs Have It Tougher, but a Business Bankruptcy Lawyer Can Help
In most business bankruptcies, the LLCs assets are sold and then used to pay off the creditors. After the bankruptcy wraps, the remaining debts are eliminated and the LLC dissolves. However, LLCs with multiple members or partnerships are a different story. While laws vary from state to state, unless you are a majority owner the trustee cannot interfere with the membership, LLC or its assets.
If you share ownership of the business with other members and are not the majority shareholder, your business may be saved from liquidation. Trustees have the right to vote shares, they typically will have a hard time forcing the dissolution of the company. Even though your shares are still tied to your bankruptcy estate, they do not present much value to the trustee unless they can be purchased by one of the other shareholders / owners.
There are different agreements companies likely have in place dictating the liability each member has regarding the company’s finances and debts, including whether you are required to relinquish your ownership before filing for bankruptcy. For this reason, it definitely pays to have a business bankruptcy lawyer on hand to help comb through the different agreements to avoid violation and possible lawsuit from your own company.
Trust CMC Law, Business Bankruptcy Lawyers in Atlanta
If you and your business are facing financial struggles and are considering filing for bankruptcy, secure the right business bankruptcy attorney and call the attorneys at CMC Law. There are options for every type of business, and we want to help you on the road towards recovery, and eventually, success!
Charles is absolutely a brilliant attorney! He is a critical thinker and determined problem solver. He is very accessible, even via text. If he is in court, his ability to multi-task, you can feel safe and secure in knowing he is handling any issues or concerns. I entrust him with my future, he is a uniquely talented attorney who always challenges himself to achieve the absolute best outcome for his clients.
I was very satisfied with Mr. Clapp services. He is a man of his word and did everything he told me he would. I would highly recommend him.
I came to Mr. Clapp by referral with a complicated case involving both personal and business debts that were out of control. Mr. Clapp evaluated the situation and gave me options that I was not even aware of. He knows his stuff, executed flawlessly, and I have been able to start over. I highly recommend Charles Clapp if you have debt or bankruptcy issues. Listen to his advice, he knows his stuff. I consulted with several other bankruptcy attorneys prior to retaining Mr. Clapp, and they did not have the same breadth of knowledge that Mr. Clapp brought to my case.
I selected Charles Clapp to handle my bankruptcy based on his already positive reviews and I am glad that I did! He was very accommodating to my schedule and made my negative life experience positive. I was actually very surprised how easy he made the process. Life happens and it’s great to be represented by someone that understand that!!! Stop your attorney search with Charles Clapp!!!