Hi I’m Michael Sandler with Fisher-Sandler talking about topics in bankruptcy. A lot of people have their own small businesses nowadays and are concerned about filing bankruptcy and how it might affect their small business. “How Will Filing Bankruptcy Affect My Small Business?”
Maybe you are a contractor and do home repairs or perhaps you have a business as an IT consultant or something like that. People want to know if they’re going to lose their business by filing bankruptcy and if it’s going to have any negative effects.
When you file bankruptcy and we’re talking about chapter 7 bankruptcy. About a month later as I’ve talked about in other videos, there’s a meeting with the chapter 7 trustee. Chapter 7 trustees job is to see if you have any assets that he can take and sell and then distribute that money amongst your creditors. Now if your businesses as a personal contractor you don’t typically have a brick-and-mortar location. Most of the time working out of your van/truck or out of your home doing those repairs. If your major asset isn’t owning real estate or work vans or lots of computers. Most times it’s just your tools in such a situation.
The trustee isn’t really going to be able to sell your business even if it’s been incorporated as a C corporation or an LLC, because the basis of your business is your personal contacts and your list of clients. That’s something that a trustee has a hard time selling. Trustees, when they’re looking to sell businesses are looking more for hard assets. Again computers, vans/trucks, real estate, etc. Things like that if the major asset in your business is what you put into your personal labor. Then typically there shouldn’t be an issue.
Now if there’s any intellectual property or things like that, that can also be something that needs to be looked at very carefully. I’ve done plenty of bankruptcies for people who have their own sole proprietorships or small businesses where they’ve registered as a C corporation or an LLC and there hasn’t been any problem, but again every situation needs to be looked at individually.
If you’d like to talk about your situation, in particular, give me a call or shoot an email you can typically get me 24 hours a day. You can also schedule a free consultation 24 hours a day by visiting our website https://fishersandlerlaw.com or calling (703) 494-3323.
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