Chapter 11 Bankruptcy Louisville Kentucky

Chapter 11 Bankruptcy Louisville Kentucky

There is always a common question about the difference between filing Chapter 7, 13 and 11 bankruptcy.  A Chapter 13 has very small debt limits (about 1.3 million) Chapter 7 and 11 have no limits.  

But do you file Chapter 11 as a corporation or personally.   You never want to continue a failing corporation.  The question is always can I you restructure a business so it will make a profit by filing Chapter 11 Bankruptcy.   

If you have a sole proprietorship, you can’t file bankruptcy for just the business.   You are the business.  You instead have to file Chapter 7, 13 or 11 and include all of your personal assets and debts.   That may be a good thing, and allow you a “fresh start” and a new budget to live on.  You can often start up the same or similar business operated differently and profitably.   After a proprietorship files bankruptcy as Chapter 11, 13 or 7, all of your debts; personal and business; are discharged and gone.

A Chapter 11 Bankruptcy filed for the corporation only eliminates the business liability.   Filing bankruptcy for a corporation does not involve your personal assets or debts.   If you have personally guaranteed debts, you may have to file seperately. 

There are generally three options for a failing business.  

1.    People often close and walk away abandoning the name and entity.  Either abandoning or personally dissolving the business normally means later litigation in court to explain why and how the business was dissolved and persons were paid from the proceeds.  If one person was paid improperly or more than the others then you may be personally responsible. 

2.    Personally dissolving your business by notifying the state, selling any assets and using the money to pay creditors a pro-rata share means that you do the work and are personally responsible for gathering assets and distributing them to the creditors.   It is full of personal liability and often it is the start of never ending problems.   

3.    Filing Chapter 11 bankruptcy means that you stay in control of liquidating a business.  In a Chapter 7 or Chapter 13 Bankruptcy a trustee would gather the business assets, sell them and distribute the proceeds appropriately.  Chapter 11, 7 and 13 Bankruptcy means providing lots of financial information to a trustee.  In a Chapter 11 Bankruptcy quaterly reports are filed with the the US Trustee.   Often it is worth the cost to just turn the assets over to the trustee in bankruptcy and let your attorney and the Trustee work it out.  You can get on with life.  Creditors are quicker to give up collecting a debt when there is a bankruptcy.  Without it, some creditors won’t give up coming after the owner.  These issues need to be planned along with your attorney to make sure that you plan How you file for a Louisville Kentucky Chapter 11 Bankruptcy.