{"id":286898,"date":"2023-11-08T13:40:00","date_gmt":"2023-11-08T18:40:00","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/chapter-7\/chapter-7-bankruptcy-for-llcs-everything-you-need-to-know.html"},"modified":"2023-11-08T15:37:00","modified_gmt":"2023-11-08T20:37:00","slug":"chapter-7-bankruptcy-for-llcs-everything-you-need-to-know","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/chapter-7\/chapter-7-bankruptcy-for-llcs-everything-you-need-to-know.html","title":{"rendered":"Chapter 7 Bankruptcy for LLCs: Everything You Need To Know"},"content":{"rendered":"\n
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Chapter 7 Bankruptcy for LLCs: Everything You Need To Know<\/h1>\n
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\n By Maddy Teka, Esq.<\/a> | Legally reviewed by Bridget Molitor, JD<\/a>\n | Last reviewed\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

If your limited liability company (LLC)<\/a> is going out of business due to financial challenges or has many business debts, filing for a Chapter 7 bankruptcy<\/a> may be a good option for you.<\/p>\r\n

Upon an LLC bankruptcy filing, a trustee<\/a> will step in to liquidate the remaining business assets, which will then be used to pay creditors.<\/p>\r\n

Read on for more information regarding your Chapter 7 bankruptcy options for an LLC.<\/p>\r\n

How Does Bankruptcy Work for LLCs?<\/h2>\r\n

As soon as a bankruptcy petition is filed, a corporation or LLC will stop operating, and an automatic stay<\/a> will take effect. An automatic stay prevents creditors from coming after the company’s assets.<\/p>\r\n

When an LLC files for bankruptcy<\/a>, the bankruptcy trustee will liquidate all the company’s assets and distribute them to creditors. This will be done according to the priority stipulated in the U.S. Bankruptcy Code<\/a>.<\/p>\r\n

Filing for a Chapter 7 bankruptcy ensures several things, including:<\/p>\r\n