Chapter 11 Bankruptcy Louisville Kentucky Attorney Lawyer

How to file for Chapter 11 Bankruptcy

Filing a Kentucky small business bankruptcy can be done as a Chapter 7, 13 or 11. You should plan the Chapter 11 bankruptcy with your attorney so that owners of the business or corporate officers may avoid becoming personally liable for any tax or business debt. Whether or not they remain liable will often depend on how the attorney files a Chapter 11 bankruptcy.

How should the owners file for bankruptcy? Should they file personally, should the small business file for Chapter 7 or 11 bankruptcy or do both need to file? Often the owner of a small business can personally file bankruptcy as a Chapter 7 or a Chapter 13 which will take care of his personal liability and allow the business to continue operations. But because the owner has filed bankruptcy does not mean that creditors will not continue to harass a business which has not filed for protection.

If a small business files Chapter 7 it normally means closing. But if the owner files a Chapter 7 or Chapter 13 bankruptcy the corporation or small business can continue to operate. Filing a Chapter 11 is expensive with attorney fees in the tens of thousands of dollars. However many business owners can often run a company in a Chapter 13 without these costs and the owner can keep control of the business while he restructures the small business. If a person has a very large debt load with personal liability over $360,475 of unsecured debt and $1,081,400 the bankruptcy must be filed as a Chapter 11 or Chapter 7 and cannot be filed as a Chapter 13.

Generally you want to keep a corporation operating if it has a positive cash flow. You want to close a company if it is draining cash flow and assets to continue operating. If the company has assets the corporation may want to sell these assets before filing the bankruptcy. This can be very important in allowing a company to pay trust taxes or employees before closing. The failure to pay trust taxes often means that the owner remains liable for taxes that can’t be bankrupted by him personally. Closing a small business also has to be done properly to avoid problems with fraudulent transfers or preferential transfers in bankruptcy.

These issues need to be planned along with your attorney to make sure that you plan How to file a Kentucky small business bankruptcy.