Skilled Attorney Advises on Bankruptcy for Partnerships and Corporations
Reliable representation for companies throughout California
When a business accumulates too much debt and revenue forecasts leave little hope of repaying creditors, it’s time to consider bankruptcy. However, the structure of your business will impact your filing options. Another major consideration is whether you want to continue operating or simply to close up shop. At the Law Offices of Michael Jay Berger, I tailor bankruptcy guidance to your company’s specific needs and circumstances. Drawing on decades of successful outcomes for businesses large and small, I make sound recommendations to give you the maximum protection under state and federal law.
Basic options for business bankruptcy
When businesses declare bankruptcy, there are two basic paths they can take:
- Chapter 7 — This is type of bankruptcy is known as liquidation. A bankruptcy trustee takes control of the company’s assets and sells them to partially satisfy the creditors’ claims. This is generally the quickest route to a resolution but it has disadvantages. In a business Chapter 7, there is no discharge of debt, so creditors may seek to collect from the company’s principal operators, such as corporate officers or directors who have made personal guarantees on loans or partners who are personally liable for partnership debts. Chapter 7 also puts the company out of business permanently, so this is not the path to take if you think the business has a chance to rebound once you get the debt under control.
- Chapter 11 — This type of bankruptcy allows the company to continue operating while restructuring its debt and repaying a portion of what is owed. The challenge is to come up with a viable reorganization plan that creditors and the bankruptcy court will accept. A Chapter 11 business bankruptcy is often complex and expensive. Until recently, the cost was prohibitive for most small businesses. However, recently enacted Subchapter V has put Chapter 11 within reach for small corporations, LLCs and partnerships.
One key to a successful business bankruptcy is getting sound legal advice from a knowledgeable attorney who takes the time to understand your particular circumstances and your goals. I am committed to giving personalized service that maximizes legal protections for your company and its individual stakeholders.
Special considerations for partners and corporate officers and directors
As mentioned above, responsible parties within a partnership or corporation can become targets for creditors who are not satisfied with partial repayment of debt. Officers or directors who control company assets can be accused of mismanagement and even fraud. Partners, due to the structure of the entity, can be held personally liable for all business debts (general partners) or for debts up to the level of their investment (limited partners). Creditors are more aggressive when they suspect a business is taking advantage of bankruptcy law to skip out on debts in bad faith.
To avoid problems that can drag out litigation and increase litigation costs, businesses seeking bankruptcy protection should be fully transparent and meticulous about details throughout the process. You should seek guidance from an accomplished attorney with a track record of tangible results for companies in your same position.
Contact a knowledgeable California attorney to discuss corporate and partnership bankruptcy
Located in downtown Beverly Hills, the Law Offices of Michael Jay Berger provides bankruptcy representation for LLCs, corporations and partnerships. To schedule a free consultation, call 310-271-6223 or contact me online today.