Most people associate Chapter 7 bankruptcy with consumers who have accumulated a significant level of debt and need a fresh financial start. However, Chapter 7 bankruptcy can also be filed by Texas businesses that need to unload specific debts as well. It is even available for companies with multiple owners. In fact, it can serve as an effective method of moving forward for many businesses when owners disagree on future company direction, including phasing out one business to continue the same service as another entity. And a trustee can be a real advantage in certain situations.
Companies can file Chapter 7 bankruptcy when they can qualify. A trustee can often help break a deadlock when companies with equal co-owners cannot agree on future business decisions. In cases of unequal ownership, the controlling partner can request that a trustee be given operational oversight and handle all financial transactions from that point until the bankruptcy is complete.
Filing a Chapter 7 petition also can work well for an independent business person who has assumed more debt than they can sustain and continue operating their business without some form of relief. Placing a trustee as the controller of the company means they can start immediately with filing for unsecured debt discharge and selling assets that are not exempt. There are certain exemptions on both the state and federal level that may be claimed, and those in service-related industries can often begin fresh in the same industry immediately following finalization.
It is important to remember that bankruptcy is intended to give the petitioner a new beginning for rebuilding financial stability. But, it is always best to have a plan beforehand. That plan is often best fulfilled with an experienced trustee guiding the process.