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Chapter 7 Business Bankruptcy
A Chapter 7 business bankruptcy anticipates the liquidation of the business and the ceasing of its operations. A Chapter 7 business bankruptcy is most appropriate when a company has no prospects for future success as a profitable business and lacks significant assets. Chapter 7 business bankruptcies are the most frequently kind of bankruptcy filed for sole proprietorships and small businesses. In a Chapter 7 business bankruptcy case, the Bankruptcy Trustee will sell (liquidate) all of the business’ assets to pay outstanding debts in an organized manner. It is the duty of the Bankruptcy Trustee to pay priority creditors first (i.e. payroll taxes and employee benefits) before the secured creditors (i.e. SBA loans) and unsecured creditors (i.e. vendors, credit cards, unsecured loans).
Another way of viewing a Chapter 7 Business Bankruptcy is that the business is going for a a “straight bankruptcy” – that company is in fact “belly-up” and the owners can consider all their investments in the business as gone. However, if the owners of a business are also creditors of the business (by virtue of having loaned the business money) – the owners can file a proof of claim along with the other creditors. Again, the company’s assets are liquidated by the Bankruptcy Trustee and the money raised by the selling of the business’ assets is used to pay administrative and legal fees. In a business bankruptcy, the secured creditors are given the collateral for their secured loans – and if it is not enough to repay all their loans then the remaining y are grouped with unsecured creditors. Bondholders and other creditors are notified of the bankruptcy by the court and usually file a “proof of claim” for money owed to them.
Generally, stockholders are not directly notified of the company’s bankruptcy by the bankruptcy court since they usually do not receive anything in the liquidation of the business. However, in the unlikely event that there is money left over after full repayment of all creditors that filed “proof of claims” – the stockholders are notified and will also need to file a claim to be paid.
If a business has significant assets – or may be viable with some debt restructuring – then a Chapter 11 Business Bankruptcy may be preferable.
Coleman Legal Group, LLC handles cases in the following cities and communities: Atlanta, Alpharetta, Roswell, Johns Creek, Milton, Cumming, Marietta, Sandy Springs, Woodstock, Kennesaw, Gainesville, Norcross, Lawrenceville, Midtown, Inman Park, Duluth, Buckhead, Dunwoody, Vinings and Smyrna.
Our attorneys frequently handle cases for clients residing in the following counties: Fulton, Gwinnett, Forsyth, Cobb, DeKalb, Henry, Cherokee, Douglas, Carroll, Coweta, Paulding, Bartow, Hall, Barrow, Walton, Newton, Rockdale, Henry, Spalding, Fayette and Clayton.
Coleman Legal Group, LLC’s Georgia lawyers practice in the areas of Bankruptcy, Divorce, Family Law, Immigration and Business Law. We have two convenient offices located at:
Alpharetta Georgia Office
5755 North Point Parkway
Suite 52
Alpharetta, GA 30022
Atlanta Georgia Office
Studioplex
659 Auburn Avenue Northeast
Atlanta, GA 30312
Copyright © 2014 | Coleman Legal Group, LLC | All Rights Reserved. Coleman Legal Group, LLC • 5755 North Point Parkway, Suite 52 • Alpharetta, GA 30022 • 770-609-1247 DISCLAIMER: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.
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