Law Offices of
Arthur W. Rummler
Copyright 2016. Arthur Rummler. All rights reserved.
Business Debt Relief: Business Chapter 7 and Chapter 11
Small Business Chapter 7 In a Nutshell:
A Small Business Chapter 7 Bankruptcy case can be an orderly and efficient method for business owners to wind down their company. If the business owners decide to file a Chapter 7 Bankruptcy case, a petition is prepared that fully discloses all assets and liabilities of the company.
A Chapter 7 Trustee is appointed to the case and examines the bankruptcy petition and schedules to make sure they comply with the bankruptcy code and also determine if there are any assets available for creditors. If assets are available, the Chapter 7 Trustee will liquidate them and collect the proceeds to distribute to creditors. If there are no assets to administer, the case will be administratively closed. Businesses to not get a discharge as opposed to individuals who do. However, the company will be terminated and effectively cease existence
Small Business Chapter 11 In a Nutshell:
The Bankruptcy Code provides several possible solutions for a Small Business in a Chapter 11 Bankruptcy case. Typically, the company is trying to stay in business, but other times the company is looking to have an orderly wind down. Chapter 11 Bankruptcy allows a business to reorganize or wind down while under court supervision and protection from creditors.Chapter 11 can take many forms, but essentially the company management proposes and executes a Chapter 11 Plan which may be used to compromise or even eliminate certain classes of debt. The plan can also be used to reject leases and other executory contracts that are not favorable to the debtor. In most cases, a Chapter 11 debtor is attempting to continue in business. In a "liquidating Chapter 11" whereby the debtor sells assets in an orderly manner, attempting to maximize their value and then uses the proceeds to pay creditors.
One common use of a Small Business Chapter 11 is dealing with the IRS. Often, a small business is forced to forgo payment of necessary withholding taxes and other taxing authority obligations in order to survive a severe cash flow crunch. Chapter 11 is an excellent tool for solving this problem and dealing successfully with tax issues.
Chapter 11 is very complex and requires full disclosure and complete cooperation of the company owners. However, it can be very effective in solving short term business problems in an otherwise viable company or winding down a company with valuable assets.
From our office in Glen Ellyn, Illinois, we proudly serve DuPage County, Kane County, Will County, Lake County and Cook County, including: Naperville, Wheaton, Lombard, Hinsdale, Lisle, Carol Stream, Downers Grove, Westmont, Elmhurst, Addison, Joliet, Plainfield, Darien, Willowbrook, Bolingbrook and many others. We are your local source for bankruptcy advice. This law firm is a Debt Relief Agency under Federal Law.