It’s well known that small businesses fail frequently, and it’s a problem for those considering filing a Las Vegas bankruptcy.
Most commonly, the business delivers products or performs services yet fails to receive any revenue for either. In business-speak, it couldn’t collect on its accounts receivable. Normally, accounts receivable are assets that you as the business owner would list on the business’ bankruptcy petition. They’re also among the first things the bankruptcy Trustee will try to liquidate and sell to creditors because, of course, your business sells goods or services for cash and not other goods and services. The Trustee then distributes them to the business’ creditors. Usually, the story ends there, but sometimes it doesn’t.
Section 554(a) of the Bankruptcy Code allows the Trustee the option of “abandoning” an asset belonging to the bankruptcy estate. This means that he or she has determined that it “is of inconsequential value and benefit to the estate” and files a report with the bankruptcy court announcing his or her intention to abandon the property.
What happens to it from here? Well, it reverts to the owners of the original business. And if it’s any of the remaining accounts receivable? Well, that reverts to the owners as well.
No, the parties that owe the business do not get a free lunch. They didn’t file bankruptcy and discharge their debts, your business did. Now, whether it’s worth pursuing those debts is up to you as the owner. Like the Trustee, you may not find it worth your while, or, the debt you are owed has a personal dimension and you wish to pursue it. It’s up to you, unless you sold your interest in the business to someone else.
Handling a business in bankruptcy, which often involves a personal bankruptcy on the owner’s part as well, is a challenging process that definitely should not be carried out alone. Hiring an experienced Las Vegas bankruptcy attorney is the right move to make.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation by calling 702-880-5554.