Filing a Chapter 7 Business Bankruptcy Petition in New Jersey
If you are a business owner feeling overwhelmed by heavy debt, it is important to consult with an expert to understand all the facts before the situation becomes even more difficult. Bankruptcy may be an option, but you should first understand the different types of business bankruptcies that are available. Under certain circumstances, Chapter 7 bankruptcy can also serve to eliminate business-related debts in New Jersey.
Filing a Chapter 7 business bankruptcy petition in New Jersey can be complicated and carries significant consequences. A practiced New Jersey bankruptcy lawyer can help you understand your options and guide you through the process.
Chapter 7 Business Bankruptcy
A Chapter 7 business bankruptcy may be helpful for small business owners, and generally may be the most advantageous option for businesses that are planning to close upon completion of the bankruptcy process. Filing a Chapter 7 business bankruptcy petition in New Jersey will depend upon how the business is organized, and the business owners’ goals for the future.
For example, if the business is organized as a sole proprietorship or general partnership, a personal Chapter 7 bankruptcy may also serve to erase the business debts—but then subjects the non-exempt business assets to sale by the bankruptcy trustee. In some cases, Chapter 7 bankruptcy can serve to eliminate any personal guarantee of a business debt.
If the business is an LLC or corporation, filing a Chapter 7 business bankruptcy petition in New Jersey in the name of the entity can serve to eliminate the debts. However, this will essentially liquidate the business. The bankruptcy trustee will sell the business assets to satisfy the creditors to the extent possible and the business will close.
Consequences of Filing a Petition in New Jersey
It is important to understand some of the consequences of filing a Chapter 7 business bankruptcy petition in New Jersey. Generally, the specific consequences depend on the circumstances but there are some common trends.
Complete Liquidation of the Business
Many business owners use a Chapter 7 filing as a way to orderly wind-down the business in a legal setting. As stated above, when a small business files bankruptcy, they generally liquidate the business and sell assets to satisfy as many debts as possible.
Trustee Controls the Asset Sales
The bankruptcy trustee will take control of the business’ assets and sell them. In some circumstances, this can result in a lower sale price than if the business owner controlled the sale. The bankruptcy trustee also will generally not negotiate with the creditors to reduce the amounts owed.
The creditors may attempt to pursue the business owner individually for any debt that is remaining after all business assets have been sold. These claims can allege fraud (i.e., an attempt by the owner to hide business assets or money from the creditors) or “alter ego” claims, which allege that the business entity was simply an alter ego of the individual, rather than a separate entity.
Talk to A Bankruptcy Attorneys Today About Filing a Chapter 7 Business Bankruptcy Petition in New Jersey
Filing a Chapter 7 business bankruptcy petition in New Jersey may be best accomplished with the assistance of an experienced bankruptcy attorney. Complications can arise throughout the process, and it is important to have someone on your side to help minimize the damage.
An attorney can help you understand the process so that you feel empowered to make the right decision for you and your business. Contact a skilled attorney today so they can begin advocating on your behalf.