You may be under a significant amount of personal debt that you are struggling to pay off. And while you may be considering a bankruptcy filing for relief, you may be nervous about how this may affect your business and business partners. After all, your personal debt is due to no fault of their own. Continue reading to learn how your bankruptcy filing might impact your business partners and how an experienced Rockland County Chapter 7 bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you protect them.
Will my bankruptcy affect my business?
In the case that you are the sole proprietor of a business, then your Chapter 7 bankruptcy may have an impact on it. This is because the New York bankruptcy court may order you to temporarily close your business. In the meantime, your bankruptcy trustee may evaluate your business’s value and how much it could sell for. This evaluation may take up to two months, which may ultimately result in the trustee ordering you to cease your business operations. Of note, any profits made during these two months would then become part of your bankruptcy.
Will my bankruptcy filing affect my business partners?
Simply put, your business partners may feel the effects of your bankruptcy filing depending on whether you are part of a partnership, corporation, or otherwise.
For one, if you are part of a partnership or multi-member LLC, your part of the business may be subject to bankruptcy. However, the bankruptcy court may not cease your business operations altogether. Instead, your bankruptcy trustee will take any profits you directly earned during your proceedings to pay off your debts. Before filing, though, you should see whether your partnership agreement contains a buy/sell clause. If it does, then you may have to sell your interests in the partnership before petitioning for bankruptcy.
Secondly, if you are the majority owner of a corporation, then your bankruptcy trustee may temporarily seize control of your interests. Ultimately, they may decide to liquidate your corporation’s assets entirely. So with the dissolution of your corporation, the other owners may be affected.
But the same does not apply if you are only one of many owners of a corporation. Rather, your bankruptcy trustee may simply incorporate your share of the corporation into your bankruptcy proceedings.
How can I protect my business during my bankruptcy?
Though it may be a big favor to ask, you may ask your business partner or other owners of your corporation to buy your interest back from your bankruptcy trustee. Or, even before you petition for bankruptcy, you may ask that they first purchase your interest. This may just be the only way to regain your share when you are back on your feet.
You cannot ignore your dire financial situation for much longer. Instead, you must retain the services of a skilled Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq. today.