Did you know that approximately 8 out of 10 startups fail and eventually shut their doors? Many entrepreneurs are faced with the decision of whether or not to file for bankruptcy, which can be an emotional decision, especially after the hard work to bring their vision to life. If your business is struggling financially, it’s important to know how to choose the right bankruptcy option.
Do you see a future for your business?
If reorganization and better management could turn around performance, the best option for most businesses is a Chapter 11 bankruptcy. A court-appointed trustee will oversee and approve your plan of reorganization as long as it is fair and equitable. Because a Chapter 11 bankruptcy is so complex, it’s critical to seek guidance from an experienced Dayton bankruptcy lawyer. Though a Chapter 13 bankruptcy is also an option for sole proprietorships that see a future in business, consulting with a bankruptcy lawyer will give you a better sense of what to do.
Is this the end of the road?
In the event that your business has no future and it’s time to close the doors, then Chapter 7 is the best choice. Otherwise referred to liquidation, Chapter 7 bankruptcy allows the court to possess the business’s assets and liquidate them to repay the creditors. When the debts are so overwhelming that there is no way to repay them through restructuring, then Chapter 7 allows the business owner to close the doors without any personal obligation for the debts.
Of course, deciding to close your business is a major decision that requires guidance and expert advice. By meeting with an experienced bankruptcy lawyer, you can ensure that you’re making the best decision possible for your business, reputation, and financial safety.