the business down immediately,” advises W. Randy Eaddy, partner with the Atlanta law firm Kilpatrick Stockton L.L.P. “During the process, don’t fail to pay certain taxes, such as sales taxes and employee withholding taxes, which are statutory trust fund items that can subject the business owner to personal liability.”
Before you make the final decision to file for bankruptcy, Eaddy suggests re-examining all alternatives, including resolution through direct negotiations with your debtors. If they’re willing to negotiate, together you can privately create a “restructuring” arrangement that can work as well as any Chapter 11 plan. “It’s also much less expensive and time-consuming,” says Eaddy.
Most importantly, business owners should not let possible embarrassment or pride paralyze them into doing nothing. “If business owners are willing to work hard, they’ll have the opportunity to get a fresh start after bankruptcy,” says Tompkins.