Filing for bankruptcy as a business owner can be stressful. There’s more to the process than meets the eye and more at stake than what you’d face when filing for personal bankruptcy. After all, you’re in charge of meeting your customers’ needs and giving your employees a steady paycheck they can rely on.
If you’re like most business owners, you’re likely wondering if you can keep the doors open while you and your Milwaukee business attorney complete the filing process. Luckily, you may be able to stay open during and after your bankruptcy, but it largely depends on your personal situation.
You’ll Need to Pick the Right Filing Method
There are two main types of bankruptcy filings that most business owners in Wisconsin will want to consider. Both offer unique benefits, but only one can help you keep the doors open.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is the most common bankruptcy option that business owners can use to help discharge and reduce their debts. This type of bankruptcy allows you to continue operating and earning money. Instead of completely discharging your debt or liquidating all of your business’s assets to settle those outstanding debts, Chapter 11 bankruptcy reorganizes and restructures the business to make debt repayments more feasible. You’ll still be expected to make payments, but you may end up owing less than you did originally.
Chapter 128 Bankruptcy
Chapter 128 bankruptcy allows you to stay open for a shorter period of time. It helps discharge your debt by effectively liquidating the business and selling the company’s assets to pay back what you owe creditors. Ultimately, the business will close its doors for good, but it will do so in a way that maximizes the potential returns for your creditors.
How to Decide if You Should Stay Open
Every situation is unique and choosing the right type of bankruptcy can help you keep the doors open for either a short period of time or indefinitely. Before you pursue a specific filing option and start talking things over with your bankruptcy attorney in Milwaukee, you’ll want to consider the following factors:
- The business’s profitability: If the business is currently profitable or you firmly believe that you can ramp up the profit potential over a few months to a year, filing Chapter 11 bankruptcy may be a better choice. But if you think the business is going to continue struggling or is likely to fail altogether, filing Chapter 128 may be a better choice.
- Your personal liability for the debts: Ideally, you structured your business to protect yourself from liability for your company’s debt. But if you’re personally liable for the debts and the company is still earning regular profits, keeping your doors open and restructuring the business may be in your best interest. The last thing you want to do is risk your personal assets just to satisfy your business’s creditors.
- The value of the business’s assets: If the company is earning more money than the company itself and its assets are worth, keeping the doors open and restructuring may be the right move.
Speak With Your Attorney
The best way to decide whether you should keep your business running while filing for bankruptcy is to speak with your Milwaukee business attorney. They’ll review your unique situation and help you make a decision that works for you and your business.
Ready to explore your options? Contact Kerkman & Dunn today to schedule a free consultation.