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What is the process involved in filing Chapter 7 corporate bankruptcy?
Anonymous2 views6 answers
I own a tutoring franchise that losing money. It is up for resale, but I don't believe it will sell through the franchise network. I currently owe tutors around $5,000.00 and families about $5,000.00 in refunds and cannot afford to pay either. How do proceed with Chapter 7 bankruptcy filing and what is it going to cost me? I literally have no assets other than the franchise. The business is a C Corp.
Your insolvency may be a trigger that allows the franchisor to terminate your franchise and do with as they choose without your involvement. The terms of that Franchise Agreemeent need to be evaluated by an attorney who can give you best advice on how to proceed.....Chapter 7 for your company may not be advisable and clearly there is a cost to do so that makes it prohibitive and is not even necessary. At some point the franchisor has to be contacted and thirds ore a franchise attorney is best starting point for you.
Generally speaking, business chapter 7 is a last resort. To help you decide if this is the correct option, your business and personal assets and liabilities should initially be reviewed in a confidential setting by an experienced NJ bankruptcy lawyer. The franchise agreement should be considered as well before you make any decision to file. As an alternative, you may wish to reach out to the franchisor and to fellow franchisees for suggestions and assistance. Good luck.
I suggest that you assemble your business bills in one pile and your personal debts (and business debts that you personally guaranteed in another pile and meet with experienced Bankruptcy counsel. Bankruptcy may not be right for you personally or corporately, but you should know all the options. The C Corp can close and your accountant can file final tax returns without a Bankruptcy filing. The process for individual and corporate Bankruptcy filings is pretty much the same, but individuals need to take a prerequisite Consumer Credit Counseling course.
Robert W GambrellChapter 13 Bankruptcy AttorneyOxford, MS ·
Since you are talking about filing a bankruptcy for a C Corporation, you must retain the services of an attorney as you cannot represent the corporation as that would be practicing law without a license.
If you are the sole owner of a corporation, a review of your debts and assets along with the debts and assets of the corporation my establish that you should file no bankruptcy at all or that you should file a personal bankruptcy and just let the corporation die a natural death since the corporation will not receive a discharge in a chapter 7 anyway.
When you have creditors that are not normal creditors such as banks, finance companies, landlords, medical providers, and governmental agencies, the creditors don't understand the bankruptcy process. Thus, you will need counsel to help you deal with angry customers and employees or independent contractors.
You should use the "Find a Lawyer" link at the top of this page to search for an attorney that handles both consumer and business bankruptcies.
Corporations cannot discharge debts in bankruptcy, so unless the business has assets to liquidate, I see no point to a corporate bankruptcy unless you want to give employment to lawyers. You, on the other hand, probably personally guaranteed the corporate liabilities and can be discharged of debts through bankruptcy. Hope this perspective helps.
A small business owner should always be careful when filing a bankruptcy. Issues often times arise concerning commingling of funds and transfers to insiders. $10,000 does not seem like a lot of debt but it chapter 7 will stop creditors from harassing the business owners to respond to debt collection activities. Speak to an experience bankruptcy attorney, not one that dabbles in bankruptcy, but one that has been down this road before. Thereafter you can make an informed decision concerning whether it makes sense to file.
