Can a business that has filed a Chapter 7 bankruptcy start another business after liquidation?

When a business files Chapter 7 bankruptcy liquidation, that business essentially no longer exists. The assets of the business are sold and the proceeds distributed among the creditors the business owed. The debts are forgiven, but the business doesn’t really have anything left. However, this doesn’t necessarily mean that a new business can’t be started or that the existing business can’t find a new lease on life after a Chapter 7 bankruptcy.

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Chapter 7 Bankruptcy for Businesses

When a business is near failing or so far in debt that it cannot continue to operate, its owners may need to file a Chapter 7 bankruptcy claim. This is also known as “liquidation.” The bankruptcy court appoints a trustee who then sells the company’s assets for cash and distributes the proceeds to creditors.

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What happens to my lease in a Chapter 7?

If you are filing Chapter 7 bankruptcy and your lease has not yet terminated, then you essentially have two major options: you can resume or reject the lease within 60 days of filing. If you are not certain what you want to do within 60 days, you may also ask for an extension. Legally, during this time the landlord is forbidden to terminate a lease because of Chapter 7 bankruptcy.

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