Chapter 7 is designed to help business owners who have decided that closing down the operations and settling the business debts is the better way to go.  Chapter 7 Bankruptcy provides for the liquidation of business assets and for the orderly distribution of the resulting proceeds according to a predetermined order of priority. As a general rule, the proceeds from a chapter 7 liquidation are paid out to business creditors before the owners, investors, or shareholders. Equity holders only recover if there is money left after all creditors are paid. In many cases, a chapter 7 liquidation can reduce business debts that are personally guaranteed by the individual owner.