Massachusetts Bankruptcy Attorneys

Nicholas F. Ortiz, Esq. and John O'Donnell, Esq. Boston Bankruptcy Lawyers 306 Dartmouth Street Boston, MA 02116 ~and~ 270 Broadway Revere, MA 02151 Tel: (617) 716-0282 Fax: (617) 507-3456 Email: nfo@mass-legal.com Experienced, Effective, and Affordable Consumer and Business Bankruptcy Lawyers in Massachusetts Main Office two blocks from MBTA Copley Stop in Boston's Back Bay.

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Businesses sometimes fail. The business bankruptcy system allows entrepreneurs to move on and start new businesses in the future. It is important for our capitalist system that the consequences of business failure not be too draconian, otherwise people would be reluctant to try in the first place.  However, when the business and/or the business owner owes debts connected to the failing business, there are real consequences, and bankruptcy is sometimes necessary to preserve precious assets and income.

Business bankruptcies come in many shapes and sizes, so a personalized assessment is advisable, but I'll make a couple of important points here.

There is a very critical distinction between types of business bankruptcies. A "business" bankruptcy can be a personal bankruptcy for a business owner (caused by the business debts) or it can be a bankruptcy for the LLC or corporation itself. These are very different types of bankruptcies. Personal bankruptcies for business owners are by far the more common of the two, and are usually caused by the owner's personal guarantee of business debts. When a business fails, lenders seek to enforce these guarantees in court and business owners sometimes have no choice but to file bankruptcy when faced with large personal judgments.

One bit of good news is that rules for these "business-personal" bankruptcies are more lenient than for straight consumer bankruptcies, at least when it comes to income issues: The means test does not apply in Chapter 7 cases with primarily non-consumer debt.  Consequently, if you make a lot of money (perhaps after returning to work in your previous field), this will not bar you from filing Chapter 7 bankruptcy. 

Chapter 7 "business-personal" bankruptcies are not treated any different when it comes to assets, however.  And in many of these cases there are significant non-exempt assets.  If a business owner wants to keep these assets, a Chapter 13 or Chapter 11 will be necessary.

We have a great deal of experience dealing with these "business-personal" bankruptcies and can likely help you effectively deal with debt from a failing business.  We also have experience and know-how when it comes to asset protection and pre-bankruptcy planning.  You can call us for free, just like anyone else.  However, if you have a complex situation, we will usually suggest that you come in for a longer, paid consultation.  We do not charge our normal hourly rate for these business consultations and usually only charge $100 if all we need is about an hour with you.

Bankruptcies for corporations or LLCs are usually even more complex and typically only make sense as Chapter 11 reorganization cases.  These cases are expensive, but they can sometimes be the only way to preserve the going-concern value of a business and maximize payouts to creditors and (sometimes) equity holders.  We enjoy the complexity of these cases, so please give us a call if it's something you are considering for your business.