Typically, a business chooses Chapter 11 bankruptcy because it wants to continue operations. For liquidating a business, Chapter 7 may appear the obvious choice. However, a liquidation under Chapter 11 may provide advantages.
- An owner who has given personal guarantees can eliminate or reduce his or her own liability by selling the assets at the best possible value
- In a Chapter 11 case, the owner of a business can continue to operate it until a sale can be arranged, allowing the business to be sold at a higher going concern price.
- A business owner will usually be in a better position to market and sell the business than a Chapter 7 bankruptcy trustee.
- The business and its assets can be sold free and clear of liens, potentially allowing a sale which could not be arranged outside of bankruptcy.
If you have given personal guarantees for an Arizona business you have decided to shut down, you should consult with an attorney who handles Chapter 11 cases to determine whether it makes sense to liquidate though a Chapter 11 bankruptcy case. For a free consultation, call (480) 719-1152.