Q: Can Bankruptcy Save My Business?
– Concerned Entrepreneur
A: Dear Concerned:
If you’re struggling with debt, but don’t want to shut down your business, bankruptcy might be one way to save your company. While this may sound paradoxical, many big corporations— American Airlines, General Motors, and Kodak—have successfully used bankruptcy to restructure debt and get a fresh start.
The main difference between you and a big corporation filing bankruptcy is that if you use personal bankruptcy (either Chapter 7 or Chapter 13) to discharge or restructure your debt, it will impact your personal credit. In contrast, a Chapter 11 bankruptcy used by big corporations doesn’t hurt the credit of corporate officers or shareholders.
A few years of negative credit may be a valid option to give you another chance to rebuild your business. But deciding between Chapter 7 and Chapter 13, or whether to use bankruptcy at all (as opposed to negotiating directly with creditors), are big decisions—but ones we can help you evaluate. Consult with a Family Business Lawyer® to see if either of these bankruptcy options (or negotiating directly with creditors) are right for you.