Your business is in financial trouble. Corporations and partnerships are legal entities separate from their shareholders or partners, and can file Chapter 7 or Chapter 11 bankruptcy in their own right. But be aware that in a partnership s Chapter 7 bankruptcy, the trustee can sue the general partners of the partnership if the partnership s assets are insufficient to pay partnership debts. As a result, partners may be facing a suit by a well-funded trustee suing for the benefit of all creditors of the partnership. Get good advice before contemplating a partnership bankruptcy.
Proprietorships are just an extension of the owner and can t file bankruptcy alone.
The proprietor must file bankruptcy, since the property and debts of the business are really just one form of assets owned by the proprietor. To answer this question, you have to know what has caused the problems the business now faces and the prospects for change. Reorganization can t create a market, increase gross revenue or make up for a poor fit between the skills that are available and the skills that are required to run the business. In between Chapter 7 liquidation and reorganization, a Chapter 13 or Chapter 11 bankruptcy could provide breathing space for you to sell the business as a going concern or jettison assets in something other than a fire sale. Selling the business could mean ongoing jobs for your work force under new ownership.