Business Bankruptcy And Avoiding DismissalThere are some clear advantages to filing a business bankruptcy liquidation over filing a personal Chapter 7 bankruptcy (aka a personal bankruptcy liquidation). One of those advantages is the fact that you don’t need to take the means test. But another big advantage is that the business bankruptcy case is not easily dismissed because of “abuse.” There are few explicit ways to dismiss a business Chapter 7 bankruptcy. However, the bankruptcy court has been known to dismiss a case because a business debtor had excess income or appeared to be hiding assets or living a lavish lifestyle that indicated that they had more money than what they claimed.

The rules are not explicitly clear on all reasons to dismiss a Chapter 7 bankruptcy filed by a business but we also know that fraud, delay and an attempt to hinder creditors are a few good reasons for dismissal. As a matter of fact, one of the most common and most successful creditor challenges to a business’ Chapter 7 bankruptcy is claiming that the debtor only filed the bankruptcy to delay some other litigation or collections action. If it is found that a debtor is using the bankruptcy system to simply delay or hinder a legal process, they could face a swift dismissal of their case.

Business debtors filing Chapter 7 bankruptcy need to make sure that their petition is in order. Take care to list all assets and their value accurately and make sure that creditors are included in the petition. As with personal bankruptcy, a business bankruptcy liquidation is not a DIY project. Working with a professional bankruptcy attorney could prevent complications in the case.