Question: I live in Cumming, Georgia, and I need to know if a business can file a chapter 7 bankruptcy. I started the business with some friends from Georgia Tech and Kennesaw State University. We had other jobs in areas like car sales, beer distribution, construction and insurance. We all grew up in the Cumming area and wanted to make movies. We got our parents to invest and we started a movie company.
We all worked on a script and we actually got a couple of good actors to be in the movie. But we ran into problems because things were more expensive than we'd thought and our money dried up pretty quickly. We got a lot of debt that is in the company's name. The debt is not in our manes personally. The company has credit cards, loans for equipment and we obligated the company to pay some of the actors, including some ladies who work at a local who we thought had talent. The business was able to get the credit because one of my friend's father's is the president of a local bank here in Forsyth County.
The business debt is about $150,000. Can we file a chapter 7 to get rid of the debt? We need to know because we are being sued and the court date is soon. We don't want to keep the business going and we want to get our old jobs back.
Answer: Businesses, just like individuals, can file a chapter 7 bankruptcy. We have handled many bankruptcies for businesses that have filed chapter 7. If a company wants to file a chapter 7 it needs to close and, if the business has assets, they usually need to be turned over to the bankruptcy trustee. The trustee may choose to sell the assets.
Filing a chapter 7 is, for many businesses, an effective and efficient way to close a business and to discharge company debts. If the debt is only in the company's name, then you should not have personal liability for it. However, oftentimes small businesses are unable to get credit without personal liability attaching to an owner, investor or employee.
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