Business Bankruptcy in South Carolina: 5 Facts for a Greenville Filing

Can a company in Greenville, South Carolina, file for bankruptcy? Yes. Your business can file bankruptcy in Greenville, SC, which goes through the Greenville/Spartanburg federal bankruptcy court. The bankruptcy court is at 300 E Washington St, Greenville, South Carolina 29601. These five facts can make or break a Greenville business bankruptcy: where you file, whether you must hire a bankruptcy attorney, which bankruptcy chapter the business qualifies for, what to expect after filing, and whether you are personally liable for the business’s debts.

The federal bankruptcy courts are split up by geographical area. South Carolina has three bankruptcy divisions: Charleston, Greenville/Spartanburg, and Columbia. Which division hears your case? That will depend on where your company is located. If you are a corporation that is based in Greenville, South Carolina, you would file with the Greenville/Spartanburg Division.

If your company is going to file bankruptcy, it needs a lawyer. A person without a lawyer can start a bankruptcy case. But a company - whether a corporation, an LLC, or a partnership - may not file without a lawyer. When filing, note that the bankruptcy court does not accept personal checks for the filing fee. And it does not accept any kind of credit or debit card. Moreover, corporations and partnerships cannot pay the filing fee in installments.

Keep Running the Business

Did you know that your company can file bankruptcy and still stay in business? It’s true, and Chapter 11 allows it. It lets a business restructure its debts. The business can propose a repayment plan. Foreclosures, levies, lawsuits, eviction - all are put on hold while the reorganization is worked out. A plan may change interest rates, lengthen terms, or even reduce the principal of a loan. Not all debts will be paid the same way. The plan makes classes of creditors. One of the best features of Chapter 11 is how tax debts are treated. The business gets at least five years to pay them. Your company can file Chapter 11 on an emergency basis. A debtor controls the sale of assets. A restructured company can emerge with a manageable financial position.

For small businesses, a Subchapter V case is a special kind of Chapter 11. To qualify, debt must be less than $3,424,000. Thanks to Subchapter V, small businesses pay no quarterly fees for the U.S. Trustee’s office, though a trustee gets assigned to every case and helps creditors and the debtor reach agreement on a payment plan. The plan is due within 90 days, and the court will extend that time only if delays are not the debtor’s fault.

Close up Shop

Maybe you don’t want to keep the doors open. To you, bankruptcy may be a vehicle of last resort, and you just want to close up shop. In that case, Chapter 7 will get the job done. In business Chapter 7, the trustee typically closes the business, sells assets, and distributes the proceeds to creditors. A Chapter 7 for your business is an orderly liquidation under the court’s protection. The law’s scheme for distributing the sale proceeds among creditors may leave everyone better off than a fire sale would. Some transfers can also be recovered. Keep in mind, though, that corporations get no discharge in Chapter 7.

Companies and LLCs are not eligible for Chapter 13. Neither are partnerships. But a sole proprietor can file Chapter 13 for the business. Are you an owner who borrowed personally to start or fund the business? You can get consolidation and relief through Chapter 13. A personal 13 consolidates all debts that the owner owes personally and pays them over a three-to-five-year period. Often, the bankruptcy court agrees to reduce what’s owed.

Once a bankruptcy petition is filed, a federal law takes effect called the automatic stay. The automatic stay immediately protects the company from collection action. Next come schedules of assets and liabilities. For Chapter 11 cases, a reorganization plan will need to be filed. In Chapter 13, a repayment plan gets filed. Chapter 7 cases typically end with a trustee selling assets to pay debts. Plans are reviewed by creditors and the court. Approval confirms the plan, and the debtor gets a discharge and “fresh start.”

Personal liability depends on how your company is set up. Owners of corporations or LLCs may be off the hook, because the business is a separate entity. Still, if you signed a personal guarantee, or pledged personal property as collateral, or used a personal loan to finance the business, then you are at risk. A sole proprietor pays all of the business’s debts personally. The partnership has its own legal identity and debts, yet partners can still personally owe debts it has run up. One thing you could do is to pursue personal bankruptcy, though that requires sitting credit counseling within 180 days beforehand unless you are eligible for a waiver.

Before deciding to file, review your business’s income, assets, liabilities, and expenses. Set realistic goals for the company. The analysis will help you understand whether the business is worth saving. Some companies ought to stick around, but if the decision is to close up, bankruptcy is an orderly way to wrap things up. First thing is, sit down for a talk with someone who knows business bankruptcy.