Business Bankruptcy in Florida:
If a business has accumulated a substantial amount of debt, or is rapidly failing, then it might be beneficial to file a Chapter 7 bankruptcy for the business. A Chapter 7 business bankruptcy is a court ordered liquidation of all the business assets, and the proceeds of the liquidation and distributed the creditors of the business.
What are the Benefits of a Business Bankruptcy?
One of the biggest benefits for filing business bankruptcy is that an independent trustee will be appointed to sell/liquidate all the assets. The trustee will handle any auction or sale of assets and then will continue to handle distributing the monies to the creditors.
An additional benefit is that it puts the creditors on notice that the business is no longer operational and thus it would be fruitless for the creditors continue to attempt to collect any debts or file a lawsuit against the corporation.
Personal Guarantees and Business Bankruptcy:
One caveat to remember, when filing a business bankruptcy, is that anyone who signed a personal guarantee on the debt of the business will continue to be responsible for that debt. For example if you owned a business and you obtained a loan in the businesses name and the bank required you to personally guarantee the debt, then you (individually) will continue to be responsible to pay on that debt AFTER the bankruptcy. The business bankruptcy will not extinguish your liability to the debt.
When to Bankrupt a Business:
- When a creditor is attempting to levy assets or place a lien on assets.
- When the debtor has many assets and has no way to liquidate them without professional help (trustee).
- When filing bankruptcy may discourage creditor suits against the business and it’s guarantors.
- When the business has no future.
- When the debts are so overwhelming that it would impossible to restructure them.
Shmucher Law, PL, a bankruptcy law firm, represents debtors, creditors, and trustees in bankruptcy matters throughout Broward and Miami-Dade counties.