I do not typically recommend filing chapter 7 cases for businesses. In chapter 7, businesses do not receive a discharge of debt, so the debts will survive the bankruptcy against the business. On the other hand, a Chapter 7 trustee will investigate all transactions between the company, its officers, vendors, lenders, and all other interested parties. The trustee can be expected to pursue all possible litigation in order to obtain funds to distribute to creditors. The debtor’s management may find this litigation to be a regrettable consequence of filing a Chapter 7 case.

Instead, most of my clients who want to close their businesses may simply “go dark.” This involves terminating business operations, closing bank accounts, notifying creditors that the business is closed and simply allowing creditors to take judgments, if they so choose. This process, of course, only works if the company does not have significant assets at the time it closes. For more information, see this Answer to Frequently Asked Questions.