Help from Denver Business Bankruptcy Lawyer Christopher German
Is your business is in financial trouble? Wondering whether a business bankruptcy is necessary or helpful for your situation? The only way to find out is to speak to a Denver bankruptcy lawyer who specializes in business bankruptcies.
While a businesses can file bankruptcy, most business owners have personally guaranteed their debt, which means the owner must file for bankruptcy, not the business. Businesses do not receive a discharge, only people receive discharges.
Should your business be reorganized or closed?
You need to know what has caused the problems the business now faces in order to determine its future prospects. Bankruptcy can’t increase the revenue, but it can free up cash to pay current operations. Bankruptcy can also make it easier to get rid of leases or contracts that are no longer to the businesses advantage. Bankruptcy can also prevent the loss of assets and or eliminate debt or allow time to pay creditors.
In a Chapter 7, 13 or 11 bankruptcy, you can sell the business as a going concern or re-allocate assets providing time for you to find solutions. Profits can be used pay non-dischargable debt in a bankruptcy such as taxes or unpaid salaries. The business bankruptcy can then be converted to a Chapter 7 bankruptcy, or dismissed if bankruptcy protection is no longer needed.
Are any of the business debts secured?
Secured debt is a creditor’s claim that is secured by a lien of some type on property, either involuntarily, as with a court judgment or tax lien, or by an agreement. Secured debt can be avoided or “stripped down” to the current value of the purchased goods in Chapter 11 or Chapter 13 bankruptcies.
An IRS tax lien is a lien on all of the taxpayer’s real estate and personal property. It can be eliminated in Chapter 13 bankruptcy if there isn’t any equity in the property. Tax liens can even encumber 401K plans and retirement savings and that are beyond the grasp of other creditors.
SBA Loans: the borrower gives the lender a security interest in the borrower’s personal property. Even items such as accounts receivable can be covered by a security interest.
Chapter 11 Bankruptcy reorganization requires a significant time and financial commitment on the part of owners and managers that must take time to participate in bankruptcy proceedings.
In most cases the business can start up again after a liquidation of the current business. Businesses that require little capital, have few assets, or are really just extensions of the owner’s skills and personality may not want to reorganize. The owners may be better off liquidating the business and starting over with a fresh business entity. This is a simple task, but requires professional guidance to do correctly.