Under the law, businesses can be recognized as legal entities and, therefore, may have certain rights when it comes to seeking bankruptcy protection. For example, a Tennessee business that has overwhelming debts and cannot turn a profit to repay those obligations may be able to use Chapter 7 bankruptcy to liquidate its assets and repay its loans. This post will briefly discuss Chapter 7 bankruptcy for businesses but, as with all legal matters, readers are asked to seek their own legal advice.
The Chapter 7 bankruptcy process for a business is similar to that for an individual debtor. A business must file paperwork to initiate the bankruptcy process, and after that paperwork is filed, a meeting of the business’s creditors will be scheduled. During the meeting, a trustee who has been assigned to the business’s case will determine what assets the business has and will take possession of them.
A business will liquidate or sell off its assets under a Chapter 7 filing just as an individual debtor does during Chapter 7 proceedings. Generally, the business will be able to discharge its debts once all of the creditors are paid off, although creditors can challenge the outcome of the process if they feel they are owed more for their losses.
Taking a business through Chapter 7 bankruptcy can be hard for an owner who wants to do what they can to pay off their debts. It is, therefore, important that business owners get legal advice from trusted bankruptcy attorneys before they begin the bankruptcy process.