One of the more complex processes for your business is undergoing a Chapter 7 bankruptcy. The complexities of Chapter 7 compared to Chapter 11 will often lead to your business closing immediately after filing for bankruptcy. The company and its assets will be sold to the creditor during this time.
Below are ways to relaunch your business as it once was or as a new brand after declaring Chapter 7 Bankruptcy.
Exempt your assets
When you begin filing Chapter 7 Bankruptcy, you must exclude any equipment you own that is instrumental in running your business. Assets and other products affiliated with the company should not be listed as eligible assets.
Company shares
Based on Florida’s exemptions for bankruptcy, you may also be able to declare any company shares exempt from the case while filing. These shares will streamline the relaunch process of your business after Chapter 7 and give you a foundation to rebuild. You can utilize the wildcard exemption on some of these assets if you decide not to pursue the homestead exemption.
Shared assets
If your business is a partnership and your partner is not filing with you for Chapter 7, any assets owned and shared should be exempted before you finalize the filing process. Selling property that is not solely yours could lead to a break in partnership and affect the rebuild of your business after Chapter 7.
Motor vehicle exemption
In a Chapter 7 Bankruptcy, you can keep one modest vehicle. If you use a vehicle for your business, you can protect that asset with the motor vehicle exemption available to Florida residents. This vehicle may have to serve for personal use as well.
Rebuild as an LLC
Sole proprietorships and partnerships can file for Chapter 7 Bankruptcy. Any non-exempt business assets will be sold and managed through the estate’s trustee. However, if you relaunch that business as an LLC, it will not be affected if you undergo this process again.
Sole proprietorships established based on your manual labor for services cannot be sold. In these cases, you can retain a sole proprietorship, but should you start creating and selling products, your business risks bankruptcy.
Seek legal assistance
The complexity of Chapter 7 Bankruptcy may be overwhelming. To ensure you are filing the correct exemptions and using them appropriately, you should seek legal assistance from an attorney who is well-versed in this process and can guide you so that you can relaunch at a later date.