Can My Business Continue to Serve Customers After Bankruptcy?
When a business owner (or group of owners) is considering filing for bankruptcy, one of the most frequent questions they have is: can my business continue to serve customers, either during or after the bankruptcy? The answer to this question depends on different factors, including, most importantly, the type of business bankruptcy that the company is planning to file.
When a business files for liquidation bankruptcy under Chapter 7, the business must close. However, in any type of reorganization bankruptcy (Chapter 11), the business can continue to operate and may be able to continue serving customers or clients in the same capacity as it was prior to the bankruptcy filing (in fact, some businesses are able to expand after filing for reorganization bankruptcy). The West Palm Beach bankruptcy attorneys at Kelley, Fulton, Kaplan & Eller can explain in more detail, and we can speak with you today about your business’s financial circumstances and potential plans for a bankruptcy filing.
Businesses Must Close with a Chapter 7 Bankruptcy Filing
The only type of bankruptcy that requires a business to close — and to stop serving customers and clients — is a Chapter 7 bankruptcy filing, which is a type of liquidation bankruptcy.
In a liquidation bankruptcy, all of the business assets are liquidated so that creditors can be repaid partially, and the business closes permanently. Filing for Chapter 7 bankruptcy is usually a decision that a business makes when it does not see any path forward for making the amount of profits that will allow it to pay creditors and remain solvent.
Reorganization Bankruptcies Allow Businesses to Remain Operational and to Continue Serving Clients and Customers
Unlike a Chapter 7 liquidation bankruptcy, any type of business reorganization bankruptcy will allow a business to remain operational and to continue serving customers. To be clear, with a reorganization bankruptcy, the business does not close and instead restructures debts and develops a plan for the future of the business. When especially large companies file for Chapter 11 bankruptcy, they may downsize during the bankruptcy process, but a successful reorganization bankruptcy allows the business to continue operating during the bankruptcy and afterward.
There are several different types of reorganization bankruptcies that can be available to businesses, including Chapter 11 bankruptcy, Subchapter V bankruptcy, Chapter 12 bankruptcy, and in limited circumstances Chapter 13 bankruptcy (for sole proprietorships). Eligibility depends on factors that include the structure of the business, the type of business, the amount of debt, and more.
Contact Our West Palm Beach Bankruptcy Lawyers Today
If your business is considering bankruptcy, it is important to know that there are a number of potential options for bankruptcy that will allow you to continue serving customers and continuing to run the business. The types of reorganization bankruptcy for which your business may be eligible will depend upon various factors, as we discussed above, so it is important to seek advice from an experienced West Palm Beach bankruptcy attorney at Kelley, Fulton, Kaplan & Eller. We can speak with you today to assess your business’s financial situation and to provide you with detailed information about options for business bankruptcy. Contact us today to get started.
Source:
uscode.house.gov/view.xhtml?edition=prelim&path=/prelim@title11
