QUESTION

Can you claim commercial bankruptcy without the personal side to bankruptcy

Asked on Oct 28th, 2019 on Bankruptcy - Florida
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Owner of two failing business. s Corp.
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1 ANSWER

Bankruptcy Attorney serving Burbank, CA
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You can, but it probably will not accomplish what you expect.  Corporations can file either Chapter 7 or Chapter 11 bankruptcy.  Chapter 11 is used to reorganize debts and stay in business.  Chapter 7 would be used to go out of business and have a trustee liquidate any assets of the corporation to pay its creditors whatever is available.  However, corporations do not receive a discharge of debts in a Chapter 7 case, so it is never really necessary to file a Chapter 7 for a corporation except to take away the responsibility of the corporate officers to sell the assets and pay the creditors.     The real issue in 99% of these types of cases are the personal guarantees and personal liability of the corporate officers.  If they are liable for any of the corporate debts, they are going to be liable regardless of whether the corporation files a bankruptcy case (unless, of course, the corporation pays 100% of the debt somehow).   So usually it is a personal/individual bankruptcy case that is warranted rather than a "commercial bankruptcy" as you stated.   
Answered on Oct 30th, 2019 at 10:26 AM

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