Small Business Bankruptcy in St. Louis

Business owners facing financial distress have several bankruptcy options. The right choice depends on your business structure and goals.

Chapter 7 -- Business Liquidation

Chapter 7 closes the business and liquidates non-exempt assets to pay creditors. Best for businesses that cannot be saved.

  • Sole proprietors can use personal Chapter 7 (includes business debts)
  • LLCs and corporations file a separate business Chapter 7
  • No discharge for the entity -- only individuals receive a discharge

Chapter 11 Subchapter V -- Small Business Reorganization

Subchapter V (added by the Small Business Reorganization Act of 2019) provides a streamlined reorganization for businesses with less than $7.5 million in debt.

  • No creditors' committee (lower costs)
  • Debtor retains control
  • Plan confirmed in 60-90 days
  • Only debtor can propose a plan

Chapter 13 -- Sole Proprietors

If you are a sole proprietor with less than $2,750,000 in total debt, Chapter 13 lets you reorganize both personal and business debts through a 3-5 year plan while keeping the business operating.

Personal Guarantees

If you signed personal guarantees for business leases, loans, or credit lines, those debts follow you personally. A personal bankruptcy (Chapter 7 or 13) may be needed to discharge those obligations.

Frequently Asked Questions

Can I keep my business open?

Yes, if you file Chapter 11 Sub V or Chapter 13 (sole proprietor). Chapter 7 typically means closing the business.

What about business taxes?

Payroll taxes (trust fund) are never dischargeable. Income taxes may be dischargeable under the 3-2-240 rule. Tax debt details.

Open Bankruptcy Project Network

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