Can not afford chapter 11 and chapter 7 does not provide debt discharge so creditors can come after me and pierce the business veil. What risk am I taking if I close the business without filing for bankruptcy?
You have identified the risks. What you may not have considered is that there is a procedure under Florida law to dissolve an entity.
Posting questions anonymously and receiving general answers do not substitute for consulting with an attorney licensed to practice in the jurisdiction in which you live. Answers posted here by Kevin C Gleason are only intended for general education of the public on legal matters. Please consult a qualified professional before deciding what to do about your situation.
Creditors will typically only come after you personally if you co-signed a debt or did something really, really bad.
There are two levels of risk that you face. First and foremost, when you are out of money and cannot restructure an ongoing entity - you are defunct, insolvent, kaput... So now what do we do...
1. You are correct, we have to protect you from the creditors who can come after you personally. In almost every situation, we file a Personal Bankruptcy to protect the individual and leave the business to rot. All we are concerned about is what will impact you.
2. PROBLEM: Just because the business is defunct, creditors can get a judgment against the business. When they do, they will look to execute. It is still your job to provide business records and you can be held in contempt for a failure to respond to discovery requests. Further, Creditors will be looking for money that they will claim you took when you should have given it to them (Transfers, Preferences, etc.)
So shut it down, keep your records, consult with a lawyer before you do anything.
A quick note on the ABC - the state court procedure. Assignment on behalf of creditors. It is a little bettet than a bankruptcy, but we rarely find it worthwhile. Close the doors. Protect yourself. Do not strip the place, do not take assets that are the businesses. Try to be good to the landlord.
Please remember, just because I answer your questions, does not mean I represent you. Unfortunately, it also does not mean I am right. You are asking a general question, and I am providing a general answer. This is not a legal opinion, but intended to provide you with more insight so you can seek advice if you believe it to be necessary.
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