Los Angeles Business Bankruptcy Lawyer Helping to Reorganize and Discharge Debts
Los Angeles Area small businesses face many challenges in the post-Covid era. This includes the ever-present high California income and local taxes. And, inflation increases the costs of business often resulting in the need to borrow money to stay afloat.
Depending upon the type of entity and debt involved, business owners may also face personal liability for the company’s debts.
I use the term “business” to mean a corporation, partnership, LLC, or LLP. But, of course, individuals can operate a business also as a self-employment, sole proprietor.

Bankruptcy may be a business’ best option to wind down the operations or restructure corporate debt. It also may be necessary to explore personal (individual) bankruptcy for the owners. If you are exploring this route, it is important to retain a qualified attorney.
I have helped small businesses reorganize and deal with debt problems under Chapter 7 and Chapter 11 of The Bankruptcy Code for over 30 years. Contact my office today to speak with a Los Angeles bankruptcy lawyer.
Los Angeles Corporate Chapter 7 and 11 Bankruptcy Lawyer Assisting Small Businesses with Options
Businesses that are corporations, LLCs, LLPs, have two choices in bankruptcy, either Chapter 11 or Chapter 7. An attorney will assist with understanding which Chapter presents the best option for one’s particular situation.
Chapter 11 is for businesses that wish to reorganize and stay in business, or control liquidation of its assets. Chapter 11 allows the debtor to renegotiate with creditors, retain employees, and honor or disallow contracts to restructure the business. This process allows businesses to eliminate or reduce business debts while providing breathing room to continue functioning.
Chapter 7, when appropriate, is for companies that are stopping operations. See the FAQs section below for details on when Chapter 7 is appropriate for corporations.

Individuals operating a self-employment business would need to look at bankruptcy options for personal bankruptcy. This could be Chapter 7, 11, or 13.
Corporations and LLCs can also file Chapter 7, but since they cannot get a discharge of debts, it is rarely beneficial to file Chapter 7 for a corporation. But see the FAQs below for when Chapter 7 might be beneficial for a business.
If you operate a corporation or other business entity in the Los Angeles area, then a bankruptcy lawyer can assist you with choosing the best path forward.
How a Business Bankruptcy Attorney Can Help Los Angeles Corporations

Bankruptcy cases are filled with landmines and traps for the unwary.
I am Mark J. Markus and I am an attorney that has advised and represented clients in business and personal Chapter 11 and Chapter 7 bankruptcy cases since 1991 in the Greater Los Angeles Area of California. I am a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization.
Small businesses and corporations have unique problems that need special handling in bankruptcy. I understand the needs and how to maximize results for the least possible cost. I know how difficult the decision is for a corporation to file bankruptcy. I know that economic shutdowns and government restrictions can cause unexpected financial hardships. My practice is structured to minimize surprises and problems in business bankruptcy cases that often arise with other bankruptcy attorneys.
To ensure this, my consultations are in-depth and comprehensive so I can anticipate problems and determine how best to achieve the goals of my business clients.
Bankruptcy cases are only filed by my office after weighing all alternatives and analysis of the pros and cons of filing.
Our firm handles business bankruptcy filings in the Greater Los Angeles Area, including counties of Los Angeles, Orange, Santa Barbara, Riverside, San Bernardino, Ventura, San Luis Obispo, and cities including Burbank, Glendale, Sylmar, Panorama City, Simi Valley, San Fernando Valley, Irvine, Santa Clarita, Oxnard, Huntington Beach, Ontario, Rancho Cucamonga, Corona, Torrance, Agoura, Long Beach, San Fernando, Van Nuys, Sherman Oaks, North Hollywood, Anaheim, Hollywood, Riverside, San Bernardino, Lancaster, Palmdale, Pasadena, and many more.
Frequently Asked Questions (FAQ’S) About Business Bankruptcy In Los Angeles
Small Business Bankruptcy Chapter 7s: When Does it Make Sense?
It is rarely, if ever, necessary for a corporation or LLC to file a Chapter 7 case. This is because, corporations do NOT receive a discharge of its debts in Chapter 7.
However, there may still be valid reasons for filing a corporate Chapter 7 case
- If there are assets to be liquidated, it allows for an independent trustee to sell the assets and pay the creditors whatever is received, in their proper priority. Essentially, it takes the corporation’s officer(s) off the hook for doing this and limits their future liability in case any creditors complain about whether the assets were sold for the highest value, etc.
- Another benefit is that it “informs” the creditors that there is nothing else to get from the corporation and the corporation is not going to be operating anymore. This can prevent multiple unnecessary lawsuits against the corporation as the months and years go by. Technically, the corporation’s creditors can still sue the corporation even after the bankruptcy is over, but it would obviously be pointless.
- It may shield the owners of the corporation from future liability to shareholders and other creditors if the Chapter 7 Trustee does not find any wrongdoing (such as transfers of money to officers outside the ordinary course of business, etc.).
So, What Happens to Corporate Debt If It is Not Paid?
Nothing. A corporation’s creditors can sue the corporation and get a judgment on the debt. And, can then try to collect from any assets of the corporation. But if there are no assets left, then they just have a judgment against a defunct entity. Thus, if they have a legal basis to do so, the creditors can pursue the individual owner(s) of the corporation to recover. See more about this in the next FAQ on personal liability of corporation owners.
How Does Business Bankruptcy Affect Owners’ Liability and Personal Guarantees?
It does not. And this is a key reason why it does not matter that corporations do not receive discharges of debts (see above).
Even if the corporation did get a discharge of its debts, as it can in a Chapter 11 case, for example, that discharge does not affect the personal liability of the owners. So, if there is a personal guarantee on a debt, or co-signing, or just direct liability for whatever reason, that will remain unless, of course, the full debt is paid by the corporation.
And that is why, in most cases where a corporation is going out of business, it is the owners who need to examine their personal bankruptcy options for dealing with the debt.
What is Bankruptcy Subchapter V of Chapter 11?
Subchapter V is a new subsection of Chapter 11 for “small businesses” that is engaged in commercial or business activities with total debts less than approximately $2.5 million (the amount is adjusted every few years). It is designed to be a more streamlined process for Chapter 11, with somewhat less burdensome requirements than a standard Chapter 11 case.
Some key differences include the ability to confirm a reorganization plan without consent from creditors, if certain requirements are met. It also allows retention of assets and ownership interest in the corporation without paying 100% of debts.
A full analysis of Subchapter V is beyond the scope of a simple FAQ section. To learn more about SubChapter V and what options are best for your business, contact us today for an appointment to go over your situation.