Bankruptcy Advisory for Businesses

At Strategic Turnaround, we help businesses facing severe financial distress explore all available options — including bankruptcy — with a clear, informed strategy. While bankruptcy can provide a legal pathway to manage or eliminate debt, it should only be considered as a last resort due to its lasting impact on credit and future financing opportunities. Our team offers expert guidance so your business can make the right decision with confidence.

What Is Bankruptcy Advisory?

Bankruptcy advisory is the process of guiding businesses through the legal, financial, and strategic considerations involved in filing for bankruptcy. At Strategic Turnaround, we help business owners evaluate whether bankruptcy is the right choice, understand the differences between Chapter 7 and Chapter 13, and explore all possible alternatives before committing to such a significant decision. Our role is to provide clear insight, prepare the necessary documentation, and connect you with trusted legal professionals — ensuring you make informed decisions that protect your interests.

Business professionals working together

Business Bankruptcy by the Numbers

Over the last decade, bankruptcy has remained a tool for organizations in extreme financial hardship. In recent years, thousands of U.S. businesses have filed for bankruptcy protection, with billions of dollars in commercial debt either forgiven, restructured, or reorganized. While these filings can offer a fresh start, they also bring long-term challenges — most notably, a record that can remain on a business credit report for up to 10 years.

How Chapter 7 Business Bankruptcy Works

Chapter 7, often called “liquidation bankruptcy,” is typically used when a business has no viable path to continue operations.
Once a Chapter 7 petition is filed, an automatic stay goes into effect, halting all collection activities and lawsuits from creditors.

  • Credit Impact

    • The bankruptcy filing will appear on your business credit profile for up to 10 years

  • Eligibility

    • Must pass a means test based on state-specific income and asset thresholds

  • Debt Discharge Timeline

    • Typically completed within three to four months

  • Future Restrictions

    • Cannot file another Chapter 7 for six years after discharge

Chapter 7 effectively closes the business, liquidates assets, repays creditors where possible, and discharges remaining eligible debts.

How Chapter 13 Business Bankruptcy Works

While Chapter 13 is more common for individuals, certain small business owners structured as sole proprietorships may use it to reorganize rather than liquidate.

  • Purpose

    • Stops foreclosure, consolidates debts, and creates a structured repayment plan.

  • Requirements

    • Completion of credit counseling before filing. Unsecured debts under $394,725 and secured debts under $1,184,200. Full disclosure of income, expenses, assets, and creditors.

  • Process

    • Court-approved plan spans 3–5 years, with monthly payments through a trustee.

  • Future Restrictions

    • Allows the filer to retain assets while systematically paying creditors.

When Should a Business Consider Bankruptcy?

Bankruptcy may be an option if your business

We recommend consulting a bankruptcy attorney and exploring alternatives like restructuring or debt settlement before committing to this path.

Alternatives to Bankruptcy

At Strategic Turnaround, we explore every possible solution before recommending bankruptcy

Debt Settlement

Negotiate reduced payoff amounts with creditors

Debt Consolidation

Merge multiple obligations into a single manageable payment

Operational Restructuring

Improve cash flow and efficiency to regain stability.

Why Work With Strategic Turnaround for Bankruptcy Advisory

Frequently Asked Questions (FAQs)

1. How does Chapter 7 bankruptcy work for a business?
It involves liquidating business assets to repay creditors and discharging eligible debts.
This process typically closes the business permanently and stays on credit reports for up to 10 years
2. Can a business continue operating during Chapter 13 bankruptcy?
Yes — in Chapter 13, the business can keep operating while repaying debts under a court-approved plan, provided payments are made on time
3. Will bankruptcy erase all my business debts?
Not always. Certain debts such as tax obligations, secured loans, or fraud-related debts may not be discharged
4. How long does business bankruptcy stay on a credit report?
Chapter 7 stays for up to 10 years, while Chapter 13 remains for up to 7 years after completion of the repayment plan
5. What’s the difference between bankruptcy and debt settlement for businesses?
Bankruptcy is a legal process handled in court, often involving asset liquidation. Debt settlement is a private negotiation that can reduce debt without court involvement

Ready To Take Control Of Your Business Debt?

If your business is struggling with unmanageable debt, don’t wait until it’s too late.
The earlier you seek professional advice, the more options you have.

Call Us Now Or Contact Us to Get a Free Consultation.