What happens if I file individual chapter 7 but own a small closely held corporation

You can continue operating the business while you are in a personal Chapter 7. Your shares in the business are an asset of the bankruptcy estate and can be used by the trustee if he deems they have value. The good news is they have no value without you and trustee will probably abandon them. The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of California. Responses are based solely on California law unless stated otherwise.

You may have personally guaranteed some or all of the debts of the Corporation. If so, you must list these debts in your petition. The Corporation will not be discharged as to any debts. You may wish to consult your attorney on this issue.

Some attorneys advise the you list all creditors of the business just in case there is a personal guarantee. Regardless, you need an asset and liability statement for the business as well as profit and loss statements. The question is what is the business worth if your shares were liquidated. You also need to know what limitations there are on liquidation because it is a closely held business. Usually, these types of businesses have major limits on transferability leading to the value being close to zero. [This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]