Businesses that require little capital, have few assets, or are really just extensions of the owner's skills and personality are ones that it may not pay to reorganize. The owners may be better off liquidating the business, in or out of bankruptcy, and starting over in a fresh entity. This can be a complex issue and requires good professional advice to do correctly. Thoughts on finding a lawyer. When Chapter 7 is best A Chapter 7, whether for the individual or a corporation, may be the best choice when the business has no future, it has no substantial assets or qualities that cannot be reproduced after bankruptcy, or the debts are so overwhelming that restructuring them is not feasible.
Individuals can get a discharge of the dischargeable debts and a chance to start over.
Corporations don't get discharges, but a Chapter 7 can provide an orderly liquidation under the direction of the trustee and at no expense to the shareholders. Creditors are assured that they will be paid to the extent of the assets available and the priority of their claim. Legal issues and bankruptcy questions are frequently complex and individual. You should consult with a bankruptcy attorney licensed to practice in your state for advice about your particular situation.