If you feel like declaring commercial bankruptcy is your business’ only viable financial solution, you may wonder if you will be held personally responsible for the debts your business incurred. Before you panic, keep in mind that whether or not this will occur depends on how your business was formed and its structure.
Sole proprietorships exist when there is only one owner who has not set up a specific business entity. If you run a sole proprietorship, this basically means that you and your business are legally inseparable. As a result, you will likely be held liable for any debts your business incurred while filing for commercial bankruptcy.
If you run a partnership, meaning that you and another person own your company, you could be liable for your company’s debts depending on what type of partnership you are in. For example, if you and your partner formed a general partnership, both you and your partner will both likely be considered equally liable for the debts of your business.
Comparatively, if your business is a limited partnership, only the general partner will be held responsible for the debts of the business. This means that if you are the limited partner, your creditors will be unable to go after your personal assets.
If you would like to know more about personal liability during the commercial bankruptcy process, please reach out to us at Morgan & Partners Inc. We will do everything we can to help your business rise above the financial difficulties it’s experiencing and to help you ensure a profitable future.