Filing Personal Bankruptcy!

Once you have decided to file for bankruptcy you need to be more updated all the time for risk free petition. With a complete overview of the company's financial situation, as well as the legal structure of your partnership and your interests in propagating the business, your personal bankruptcy lawyer will be able to advise you on your options and what your best course of action is. First of all, when your business partner files for personal bankruptcy, his assets, including his stake in the business, will transfer to the trustee. However, as assets and debts are viewed separately in personal bankruptcy, just how this transfer will affect your share in the business, as well as the continuation of the business, will depend on your specific situation.

Two of the most important aspects to consider when your business partner files for personal bankruptcy are the company's value, as well as its debt. Most businesses are founded on at least one loan. If your partner is a co-guarantor of this loan, his personal bankruptcy could affect this loan in a number of ways. It is possible that the trustee will take over his 50% interest in the business, in which case, the court will be involved in a plan to repay your partners part of the loan. But, depending on the structure of the debt, you may end up being fully responsible for the company's debt if you are a co-guarantor of the loan. In the worst case scenario, your partner's personal bankruptcy could trigger a clause in the loan contract that will make the entire debt due immediately. To understand your options, you are best advised to have a reputable CPA perform a business valuation in order to document the company's value. Obviously, this value will depend not only on the business's debts and assets, but also on the revenue generated. If the revenue is high enough, you may be able to negotiate complete ownership of the company if that is your objective. Before you enter negotiations, however, you must realize that as your partner has already filed personal bankruptcy, you will be dealing with the trustee. The trustee will investigate whether it is in the best interest of your partner's creditors to sell your partner's share of the company to you, or to force the sale of the entire company to maximize the value of your partner's share.