Business Bankruptcy in Boston: 5 Facts About the District of Massachusetts

In the state of Massachusetts, you are likely to have your business bankruptcy case heard in Boston. Of course, every case is different. Most businesses need a lawyer. They can’t get filing fees back. A small business may be able to use a Subchapter V bankruptcy. A bankruptcy filing will stop most collection efforts.

It’s important to know which division your case will be heard in. There are three divisions - Eastern (Boston), Central (Worcester), and Western (Springfield). The clerk’s office for the Eastern Division is located in the John W. McCormack Post Office and Courthouse at Post Office Square in Boston. Filing hours are until 4:30pm on business days. The U.S. Trustee for Region 1 oversees all bankruptcy cases in Massachusetts. Their main office is at Five Post Office Square, Boston. The Worcester office closed as of September 30, 2025, meaning that filings from Central and Western Massachusetts now go through the Boston office.

By law, corporations must have an attorney, and so do other entities. There are very few exceptions. The lawyer has to be admitted to the district court bar or get special permission to practice for that one case (pro hac vice). There is no special bankruptcy bar, so ask your lawyer if they are admitted to practice in the federal district court for Massachusetts.

You’ll have to pay $1,738 to file for Chapter 11 bankruptcy, which includes a $571 administrative fee. Chapter 7 filing fees are $338. There are no refunds, even if the case is dismissed or you decide not to continue. The court won’t take cash. You’ll need to pay your filing fees with money order or cashier’s check. Alternatively, if you have an attorney, you can use their check or let them put it on a credit card on your behalf.

Subchapter V Bankruptcy

If a small business is viable but temporarily distressed, a Subchapter V bankruptcy may be the way to go. This is a streamlined form of Chapter 11 bankruptcy that’s been available since February 2020. It has lower costs and fewer procedural burdens. Many small and mid-size businesses in Massachusetts qualify for Subchapter V, which is increasingly seen as a more viable alternative to traditional Chapter 11 bankruptcy. As of April 1, 2025, the debt limit for a Subchapter V bankruptcy was $3,424,000. But Congress passed a bill raising that limit, so you need to check to make sure it’s been signed into law. Subchapter V debtors are lucky. They don’t need to pay the quarterly fees that other Chapter 11 debtors do. However, they do need to file monthly operating reports using Form B 425C.

Automatic Stay

Once creditors have already sued you, levied on your accounts or property, or tried to evict you, your options will be limited. Once you file for bankruptcy, however, an automatic stay goes into effect under federal law. This stops most collection activity, including evictions, foreclosures, and repossessions. The automatic stay isn’t a permanent solution. It doesn’t erase your debts, and most tax debts are not dischargeable. In fact, the only way for corporations to get a discharge is with a confirmed Chapter 11 plan while they are still operating and having made all the payments called for. If your business shuts down instead, not everyone gets paid back. It’s essential to understand what’s left, who gets paid, and in what order.

Even if you have a corporation, under Massachusetts law, missed payroll can lead to personal liability. Filing before payroll fails can help avoid that. A lot of Massachusetts small businesses are set up as LLCs or sole proprietorships, which means the owner’s personal assets may already be on the line due to loan and lease guarantees. Personal guarantees on leases and small business loans are common in Massachusetts. This complicates things, so it’s important to coordinate a business bankruptcy filing with a personal bankruptcy strategy.

Time to Start Thinking About Filing

If you’re always late on payroll, rent, vendor invoices, and loans, or if you’ve maxed out all your credit lines and burned through your reserves without any hope of new funding, it might be time to start thinking about filing. In most cases, bankruptcy is the last resort, and if your business is viable, restructuring options and debt settlement should be tried first. Assignment for the benefit of creditors (ABC) is less commonly used in Massachusetts than in California, but it’s still an option worth considering. A qualified insolvency attorney can help you decide whether it makes more sense to use a non-judicial wind-down or ABC assignment rather than going for a formal bankruptcy.

If you’re facing mounting pressure, you’re not alone and you do have options. Bankruptcy is a legal tool that can protect assets and manage liabilities when used strategically. It’s important to set goals for the next 12 to 24 months. Do you want to reorganize or execute a controlled exit? A bankruptcy can help carry a business through a tough time or protect the owner, employees, and the brand name during a controlled exit. It’s a court-supervised process. The sooner you assess the situation, the more control you’ll have over the outcome.