Expert: Norma Duenas - California Bankruptcy Attorney - 10/6/2010

Question
Regards to C corporation, does the filing of a bk (Chapter 7) means the corporation will be dissolved?

Answer
It depends on whether you are filing a corporate bankruptcy or not. Chapter 7 Corporate bankruptcy is generally used to basically dissolve the corporation and from any assets available pay creditors with. Whether you need to file a corporate bankruptcy will depend on your particular fact situation. When you file a corporate bankruptcy the corporation does not get a discharge. Generally you file a corporate bankruptcy if you wish to have the trustee dissolve the corporation and liquidate the assets and to discourage possible lawsuits from creditors.

If you are considering filing a Chapter 7 corporate bankruptcy you should have your case evaluated by a qualified bankruptcy attorney who can determine whether it is best to have the assets liquidated on your own and have the corporate existence terminated after that or whether you should file for Chapter 7 corporate bankruptcy.

If you are filing a personal Chapter 7 bankruptcy then whether the corporation will get dissolved will depend on whether it is a protected asset in your bankruptcy case. The bankruptcy exemptions in your state determine what assets are protected in your bankruptcy case.

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