Can We Protect Any Assets If We File A Chapter 7 Bankruptcy For Our Business?
A business is not permitted to retain its assets in a Chapter 7 case. In a business bankruptcy, a company must fully disclose all assets on the bankruptcy petition that will be subject to jurisdiction of the bankruptcy court to be administered by a trustee. Individually owned assets are not part of the corporate or limited liability company case but could be pledged as collateral. Frequently with SBA loans, the individuals may have provided a secondary mortgage on their home as additional collateral and a personal guarantee. The home itself is not an asset of the company. The existence of that mortgage lien would be disclosed on the Petition as part of the lienholders collateral. Individuals may be able to retain their home if the company structures a resolution with the secured creditor. To summarize, the business assets of a Chapter 7 Debtor are property of the bankruptcy estate to be administered for the benefit of creditors of the Chapter 7 entity and are not protected in any way, shape, or form.
If We File A Chapter 7 Bankruptcy For Our Business, Do We Still Need A Bankruptcy Attorney?
The business itself would not need the assistance of a bankruptcy attorney because the Chapter 7 trustee would administer the assets with cooperation from the business owners and debtor’s counsel in that process. The Chapter 7 debtor’s counsel has a responsibility to provide information and cooperate with trustees. Individuals who have guaranteed certain debts of a business in a bankruptcy case may need counsel to advise them about the separate claims of their creditors. Absent unusual circumstances, business itself does not need counsel, but the individuals themselves frequently need the guidance of a personal attorney.
For more information on Chapter 7 Bankruptcy in New Jersey, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (908) 373-8500 today.