A business filing for Chapter 7 bankruptcy is in some ways like an individual or married couple filing for bankruptcy, but in many ways, it is very different. There will be consequences or risks in filing a Chapter 7 business bankruptcy in Edison but it may end up being your best option for starting over. Call the experienced team at Gillman Capone to discuss what you need to do.
Any business entity can file for Chapter 7 bankruptcy, including those located in New Jersey, have their primary assets here, or if the primary relationships of the operators and owners of the business are here.
The owners or managers will be heavily involved in the bankruptcy actions. It may impact any employees, legal representatives, or other individuals who are associated with the business, like vendors who supplied the business and may or may not be owed payment for their services.
A business must file in one of the New Jersey bankruptcy courts located in Newark, Trenton, and Camden. The location of the business or its assets will determine where the case is heard. A business in or around Edison or Middlesex County would be heard in the Trenton vicinage. Those in northern counties can be heard in the Newark vicinage, and counties in the south would be heard in the Camden vicinage.
Prior to the bankruptcy filing, the business must have a corporate resolution that meets the requirements in which it agrees to file for bankruptcy. A small business with a single member can do this with a written document or a larger business can do it with a vote at a corporate office or other location. In either situation, our local bankruptcy attorneys can assist in crafting that resolution.
The big consequence of an Edison business filing for Chapter 7 bankruptcy is that it will immediately close, as all its assets and operations must be turned over to the appointed Chapter 7 trustee. The business will also go through a standard but significant investigation by the appointed trustee to review its assets and debts, as well as the operations that led to the bankruptcy filing and its inability to pay creditors.
The filing of a bankruptcy can significantly impact the future of the business. Though the business closes, it also offers the owners an opportunity to close the business with the state and federal authorities and move forward with their lives. In other reorganizational bankruptcy cases, like a Chapter 11 business bankruptcy or Sub-Chapter V bankruptcy, the business may be able to restructure itself but go through significant change and financial restructuring to do so.
Typically, we will meet with the appointed trustee and one of the owners at the business location to review the assets and discuss the liquidation process. The business is then closed, and will be unable to pay its employees or control how its assets would be sold or liquidated. Another consequence is that bankruptcy filings are public records, available through standard public record searches.
Unlike individuals, a business cannot represent itself in court. First and foremost, the business must retain an attorney to proceed with the bankruptcy filing. The required forms include a list of all its assets, debt, income, and expenses, and truthful answers to other questions regarding its financial circumstances.
In addition, the business must file a corporate resolution in which a business agreed, under the terms of its charter or other corporate documents, to file for the bankruptcy case, through an agreed-upon process.
The business must provide information on its prior and recent revenue, and its expenses and operations over the prior years. The business will need to provide its filed tax returns, bank statements, and other financial documents.
The business would also need to provide information on all its property or assets, as well as debts or obligations at the time of the filing or that were satisfied in the recent period prior to the bankruptcy filing.
The filing of a bankruptcy petition requires a signature that declares the information provided is true and correct, to the best of their knowledge under the federal penalty of perjury.
It is difficult in a corporate scenario to provide accurate information in the bankruptcy petition without the documents that support that. For example, the business is asked to disclose its income in the three years prior to the bankruptcy filing. For an individual to sign that document under penalty of perjury, they would want to have the assurance that the information is accurate and is based on filed tax returns, as opposed to tax returns that might be drafted but not yet filed.
If that information is not immediately available, there are certain means in which we can try to obtain that information, either through public searches, taxing authorities, or through requests for other businesses.
Filing for bankruptcy may be the best option for you, but there are still some consequences of filing a Chapter 7 business bankruptcy in Edison that you should know about. At Gillman Capone, we run through all other options before determining if bankruptcy is the best option. Call us now for a free case evaluation.
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