Chapter 11 is not the only type of bankruptcy that is possible for a business. Our Spring Lake Heights lawyers can discuss the possibility of a Chapter 7 business bankruptcy if that ends up being your best option.
To qualify for a Chapter 7 bankruptcy, a business only has to be located or maintain its primary assets in New Jersey. Then, it is entitled to file a bankruptcy case in the New Jersey bankruptcy courts within the federal court system, and the court location is based on the county where the business is located. For example, Spring Lake Heights would be handled in the Monmouth vicinage of the New Jersey bankruptcy court.
The cost of filing for Chapter 7 Business Bankruptcy in Spring Lake Heights would include a legal fee and then the filing fee paid to the bankruptcy court when the petition is filed. The legal fee for a Chapter 7 business bankruptcy for our firm depends on the complexity of the matter. We typically offer flat fees with the lowest range being $3,000, plus filing fees and costs, and sometimes higher depending on the complexity of the case.
A dissolution means that the business is closed and no longer operating. This can be done for businesses without debt by filing a dissolution with the state of New Jersey. A business can also dissolve through a Chapter 7 bankruptcy as well. Reorganizing a business typically means it will either continue to operate for a period of time, and reorganize its debt so the business can continue, or it could mean that the business reorganizes its debt toward a potential sale of its assets.
In a Chapter 7 business bankruptcy in Spring Lake Heights, there is no discharge of debt to the business since it is effectively closing and liquidating its assets. However, an individual who owns a sole proprietorship or has an interest in a business and has accumulated debt may choose to file a personal bankruptcy in either Chapter 7, Chapter 11, or Chapter 13. If an individual who has accumulated debt as a result of a business files a personal Chapter 7 bankruptcy, they could discharge debts associated with credit cards, personal loans, personal guarantees on business loans, such as loans to the business, business leases, or other debts, which are typically known as unsecured debts.
The business itself will not have any debt to deal with if it files a Chapter 7 bankruptcy because the creditors would be limited to recovering whatever they could through the liquidation of assets. What may be leftover for a business owner is what we call the spillover effect of the business debt, which could be obligations that the business owner owes personally as a result of their operation or ownership.
In a Chapter 7 business bankruptcy, the court will appoint a trustee who will decide whether it is in the best interest of the bankruptcy estate to liquidate any and all property owned by the business. This could be physical assets such as equipment, machinery, real estate if owned by the business. It could also be the right to collect on accounts receivable, which would be amounts owed to the business by its customers or vendors.
When a Spring Lake Heights business files a Chapter 7 bankruptcy, legal title to the business assets are then held by the appointed trustee. The trustee then would have legal title to remove and sell any and all assets that are owned by the business at the time of filing. If an owner has assets that they own in the business or which is to potentially purchase those assets from the bankruptcy estate, it is not uncommon that we do so at the beginning of the case.
In a Chapter 7 business bankruptcy filing, the parties will typically be the business itself as a legal entity, the owners and/or operators of the business, and creditors or people who believe that the business owes money to them. It may potentially impact employees or managers of the company, and other parties with which the business has contracts, regardless of whether the business owes money on those pending contracts.
You have numerous options as a business owner or sole proprietor, and filing a business bankruptcy is just one of them. Reach out to Gillman Capone and our experienced bankruptcy attorneys. We explain al of your options, and if necessary, our Spring Lake Heights Chapter 7 business bankruptcy lawyer will provide all the information you need.
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