Can My Business Corporation or Limited Liability Company File A Chapter 7 Bankruptcy? Part 1

13 Jan Can My Business Corporation or Limited Liability Company File A Chapter 7 Bankruptcy? Part 1

As a bankruptcy attorney, I frequently see clients in my office that want to file a Chapter 7 bankruptcy for themselves individually as well as for a business corporation or limited liability company (LLC) that they may own. For the owners of most small businesses, this makes perfect sense because they frequently have personally guaranteed the business debts.

However, from time to time I will get a prospective client in my office that wants to file a Chapter 7 bankruptcy for their business only.

As fellow Bankruptcy Law Network contributor, Kent Anderson notes in his article: “Can A Small Business File For Bankruptcy?” while a small business can file for a Chapter 7 bankruptcy, the business, unlike an individual consumer debtor, cannot have its debts discharged at the conclusion of thebankruptcy.

This is an important distinction because the inability for a corporation (or an LLC) to get a discharge in bankruptcy means that the creditors of the business have the right to resume collection activities once the business bankruptcy is concluded.

So why would a corporation or an LLC want to file a Chapter 7 bankruptcy?

The answers to that question will be addressed in Part 2 of this article.

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I've been a consumer bankruptcy lawyer for nearly 25 years. Since that time I have helped many people resolve their financial problems. I have been practicing law since 1986 and I am licensed to practice in all state and federal courts in the State of Louisiana. Because I am a sole practitioner, you know that your debt matters are being handled by me personally. In addition to my work with consumers, I am also frequently asked to speak at local seminars on bankruptcy law. I am member of the following organizations: • Louisiana Bar Association • National Association of Consumer Bankruptcy Attorneys • Bankruptcy Law Network My office is located at: 3920 General DeGaulle Drive, New Orleans, LA 70114 Telephone: (504) 368-4101

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