Our business is being sued by a former employee for OT. We do not have money to pay so we are considering filing for bankruptcy as a a company. It is a LLC. What are the negative consequences if we file?
In order to avoid liability for a judgment, you would have to file a chapter 7, which is a complete liquidation of the business, which in turn, would shut the business down for good, liquidate assets, etc. Thus, filing a chapter 7 would end the business.
If you were to file a Chapter 11, which is a business reorganization, you would be allowed to continue your business, but you would still have to pay any judgment entered against you. Thus, this would not effectively get you around your liability.
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