Understanding Chapter 7 Bankruptcy For Your Business
There are times when a business cannot carry on operations and continue to meet its financial obligations to its creditors. Fishback Law Corporation in Irvine helps Orange County and Southern California businesses in bankruptcy complete a Chapter 7 and place business owners in the best position for moving forward in their personal and professional lives.
Why Chapter 7?
Everyone who enters into a business, of course, plans to succeed, but the harsh economic realities tell a different story. As many as one-third of all new businesses fail within the first two years, and after four years less than half of all new businesses have survived in most industries across the board. In a recession or sluggish economy, the numbers can be even worse.
When a business is unable to attain or maintain profitability and avoid insolvency, Chapter 7 is often an essential component of winding up operations and an effective means of putting creditors on notice that the business has been legally declared by a bankruptcy court to have no assets or ability to pay its debts. This notice effectively relieves the business owner of the ordeal of undergoing multiple lawsuits by creditors in an attempt to collect on debts. Creditors on notice of a Chapter 7 business bankruptcy understand that further collection efforts or litigation would be pointless, and they are not likely to pursue the matter any further.
The Chapter 7 Process
The process begins by filing a petition with the bankruptcy court in the appropriate jurisdiction. This could be where your business is organized or where you have your principal place of business. At the time your petition is filed, you will also need to file various schedules with the court, detailing your assets and liabilities, and current income and expenditures. You may also be required to file other documents, such as the statement of financial affairs and your most recent tax return.
Also among the documents you file with the court will be a list of all of your creditors, including the amount owed and type of claim. The next step is a creditors’ meeting, also known as a 341 meeting after section 341 of the Bankruptcy Code, and debtor examination held by the U.S. bankruptcy trustee. The trustee and the creditors are allowed to ask questions of the debtor about the financial affairs and property of the business.
Unlike a personal bankruptcy in Orange County or other Southern California counties, a business bankruptcy does not conclude with a discharge of debt for the debtor. However, the bankruptcy does serve very much the same purpose, since creditors on notice of a business bankruptcy generally do not bother with collection attempts.
A business that is struggling to meet its obligations can sometimes be forced into bankruptcy by its creditors, who can initiate the process by filing a petition for involuntary bankruptcy. Most often when this happens, the creditors try to force the business into Chapter 11, although a Chapter 7 involuntary bankruptcy is possible as well. If this happens, you will definitely want to have a qualified and experienced bankruptcy attorney on your side throughout the process. Call our Orange County lawyers, and we will be happy to represent you.
Contact An Experienced Orange County Legal Team Today
Our office handles all aspects of a Chapter 7 business bankruptcy, from the filing of the petition and assistance with the preparation of required documentation to representation at the section 341 meeting. We also represent clients in any bankruptcy litigation which sometimes arises as a necessary component of the Chapter 7 process.
At Fishback Law Corporation, very often we are filing a Chapter 7 consumer bankruptcy for an individual who is also a business owner, and it is often necessary to file a Chapter 7 business bankruptcy as well. The Chapter 7 business bankruptcy can be an essential component of protecting the individual by tying up those loose ends and ensuring the maximum in bankruptcy protection. For business bankruptcy in Orange County and throughout Southern California focused on your particular needs and goals, contact Fishback Law Corporation online or call our office at 877-532-6806.