Authorization and counsel
Before a company can file business bankruptcy, the filing generally must be authorized according to its governing documents, often by a board or member resolution. A corporation or LLC must be represented by an attorney in bankruptcy court, so the owner cannot file the petition personally on the company's behalf. The petition identifies the chapter, such as Chapter 7 or Chapter 11, and whether the company elects Subchapter V treatment. Sole proprietors file as individuals, since the business is not a separate legal entity. Getting the authorization right avoids challenges to the filing later.
What the filing includes
Along with the petition, the company files schedules listing assets, liabilities, contracts, and leases, plus a statement of financial affairs describing recent transactions. In Chapter 11, the company typically also files motions on the first day to continue paying employees, use cash, and maintain essential services. Gather the balance sheet, tax returns, bank statements, creditor lists with addresses, contracts, leases, and records of payments to insiders. Many business cases also require a list of the largest unsecured creditors. Accuracy matters, since the schedules are signed under penalty of perjury. Missing creditors may not receive notice, which can complicate the case.
The first days after filing
Once the petition is filed, the automatic stay takes effect and creditors must generally stop collection activity. The Office of the United States Trustee will schedule an initial meeting and request documents, and in Chapter 11 the company begins reporting on its operations. In a Chapter 7 case, a trustee takes control of the assets. Bank accounts, insurance, and payroll arrangements usually need attention right away, because those relationships continue after the filing. We prepare the filing package, coordinate the timing, and help the company manage communications with employees, vendors, and customers. The goal is a filing that is complete and that sets the case on a stable course.
