Individual bankruptcy is different from corporation bankruptcy. Unlike personal bankruptcy, when the corporations file for bankruptcy under Chapter 7, they don’t get a bankruptcy discharge. A bankruptcy discharge informs creditors that you are not liable for your owed debts. In the case of corporations, it will mean that they are still liable for debts which were not paid off when bankruptcy estate was completely administrated and closed. Dallas based bankruptcy law firm https://www.recoverylawgroup.com/ says that corporations are also not allowed any exemptions i.e. they cannot protect any assets unlike individuals.
What can lead to corporations filing for bankruptcy?
A corporation might opt for bankruptcy as it provides time for the partners to look for an alternative source of income (employment). The primary aim of a trustee in business bankruptcy is to close the business and pay the corporation’s creditors anything possible. The payment is made by accumulating the assets of the corporation and selling them. The proceeds so generated are distributed among the creditors. In case any creditor is not paid fully, the corporation remains liable for the unpaid debt. This can be helpful as it takes away the responsibility of the corporation’s partners for closing the business.
Irrespective of your situation, speaking with a bankruptcy attorney is important if you are contemplating filing for bankruptcy. Your corporation’s recent transaction, business assets, and other relevant information can be used by the lawyers to determine whether filing for bankruptcy is the best way to close your business. In case you haven’t hired one, you can consult with experienced bankruptcy attorneys at 888-297-6023. In case you don’t wish to close your business but are looking to get rid of your debts to get back on financial track, you can opt for the reorganisation of your debts through Chapter 11 bankruptcy.