Suzzanne Uhland presently works at O’Melveny & Myers LLP as a partner. During her time in this position, Suzzanne Uhland has demonstrated extensive knowledge of the bankruptcy process.
In some situations, declaring bankruptcy is a business’ only option. In such cases, business owners must educate themselves in the four different types of bankruptcies that can be declared.
By filing for Chapter 7 bankruptcy, businesses are entering into a process more commonly known as liquidation. During liquidation, trustees sell assets to offset outstanding debts, while debts that cannot be satisfied are discharged. Chapter 7 is an attractive option for businesses with few major assets and no future plans to continue operations.
Sole proprietorships, corporations, and partnerships that do plan on recovering in the future will prefer a Chapter 11 filing, which revolves around a reorganization plan that will be closely monitored by a court-appointed trustee.
Chapter 13 bankruptcy can also be filed by sole proprietors, though it is more commonly filed by consumers, and it involves the debtor outlining a plan for repayment. When compared to Chapter 7 bankruptcy, a Chapter 13 filing can benefit a sole proprietor by protecting personal assets, such as a house, that are involved with the business.
Finally, Chapter 12 bankruptcy is a filing reserved for family farmers and fishermen who can pay back debts over a period of three to five years.