Chapter 7 for Businesses in Nevada

Sometimes, despite an owner’s best efforts, a small business simply can’t continue. Debt piles up, customers disappear, or the market shifts in ways that make recovery impossible. When that happens, trying to hang on can do more harm than good, both financially and emotionally.

For many business owners, Chapter 7 business bankruptcy is the cleanest, fairest way to wind down operations, deal with creditors properly, and close the doors with integrity. At Larson & Zirzow, our Las Vegas business bankruptcy lawyers help businesses of all sizes navigate this process from start to finish with clear advice, careful planning, and a focus on protecting the owner’s interests as much as possible.

What Is Chapter 7 for a Business?

Chapter 7 is sometimes called liquidation bankruptcy. For businesses, that means the company itself stops operating and its remaining assets are gathered and sold by a court-appointed trustee. The proceeds are distributed to creditors according to strict rules set out in the Bankruptcy Code.

Unlike personal Chapter 7 bankruptcy, a business that files Chapter 7 does not get a discharge of debts and then moves on with its operations. The business entity itself, whether it’s an LLC, corporation, or partnership, ceases to exist once the assets are sold and the case is closed.

For struggling businesses like restaurants, contractors, retailers, or providers of services, Chapter 7 can provide a dignified, orderly exit instead of chaotic lawsuits, creditor fights, or collection nightmares.

When Does Chapter 7 Make Sense for a Business?

Chapter 7 is often the best choice for a business in situations like the following:

• The business has stopped operations or cannot continue profitably.
• There is no realistic way to restructure debt and keep the doors open.
• Assets exist that can be liquidated to pay creditors in a fair and legal way.
• The owners want to avoid the risk and stress of creditors seizing assets on their own or suing for unpaid debts.

Trying to keep a dead business alive can quickly become more expensive and more personally risky than closing it the right way under the court’s protection.

What Happens to the Owners?

One of the biggest worries for business owners is what will happen to them when their business files for Chapter 7. Many business owners sign personal guarantees for the loans, leases, or lines of credit of their businesses. A key point to remember is that a business Chapter 7 only covers debts for the company itself, not for the owner individually. After a Chapter 7 business bankruptcy, debt still remains and creditors often pursue the owner personally for repayment.

This is why it’s so important to work with experienced business bankruptcy counsel. Sometimes, it makes sense for the business to file Chapter 7 alone. Other times, the owner may also need to file a personal bankruptcy to fully protect their home, income, or other assets. Larson & Zirzow helps business owners see the big picture so there are no unpleasant surprises down the road.

How the Chapter 7 Business Process Works

Filing Chapter 7 for a business is not as simple as shutting the doors and walking away. The process must be handled properly to protect the owner from accusations of wrongdoing or creditor lawsuits.

Here’s what typically happens:

1. Preparing to File: We review the company’s assets, debts, and any recent transfers of money or property. We make sure there are no hidden issues that could lead to claims of fraud or “preferential payments.”
2. Filing the Petition: Once the paperwork is ready, we file a detailed petition with the bankruptcy court. The Automatic Stay takes effect immediately, stopping most collection efforts and creditor lawsuits.
3. Appointment of Trustee: The court appoints a trustee who takes control of the company’s assets. The trustee’s job is to gather, manage, and sell those assets for the benefit of creditors.
4. Winding Down: The business stops operating if it hasn’t already. Depending on the situation, either the owners or the trustee take steps to ensure employees are laid off properly, and leases, contracts, and accounts are closed in compliance with the law.
5. Distribution to Creditors: The trustee sells any remaining assets, like equipment, inventory, or accounts receivable, and pays creditors according to the priority set by bankruptcy law.
6. Closure: Once the trustee’s work is done, the bankruptcy case is closed, and the company no longer exists as a legal entity.

Throughout this process, Larson & Zirzow is by your side to handle filings, communicate with creditors and the trustee, and protect you from mistakes that could lead to unforeseen personal liability.

What About Lawsuits or Tax Debts?

When a business files for Chapter 7, most collection lawsuits against the company are stopped by the Automatic Stay. However, debts owed to the IRS or state tax agencies can be complicated. Some tax debts may survive and can lead to claims against owners who are personally liable for them.

Larson & Zirzow understands these details and helps clients plan. If needed, we can coordinate the business’s Chapter 7 with a personal bankruptcy or other legal strategy to address tax exposure and protect personal assets.

What Should a Business Owner Do Before Filing?

Winding down a business takes care. The months leading up to filing are critical. For example, transferring assets to business affiliates or family members, paying off debts to friends or insiders of the business, or trying to hide business assets can lead to legal problems, clawbacks, or even claims of fraud.

At Larson & Zirzow, we walk you through exactly how to close out bank accounts, notify and pay employees, handle tax filings, and protect your records so you exit cleanly and legally.

Why Not Just Shut Down Without Bankruptcy?

Many business owners think they can simply shut the doors and walk away, but doing so can create big problems. If you close down without a bankruptcy, creditors can still sue the company for unpaid debts or sue you personally if you signed guarantees. They can try to seize leftover assets or fight with other creditors over whatever is left.

Chapter 7 provides a clear legal structure for wrapping up the business’s operations, satisfying creditors as fairly as possible, and protecting you from accusations of misconduct. It brings finality and peace of mind.

Why Larson & Zirzow for Chapter 7 Business Bankruptcy in Las Vegas?

Larson & Zirzow is a boutique Las Vegas bankruptcy firm known for its expertise in both business and personal bankruptcy. Our team includes a Board-Certified Business Bankruptcy Specialist, a credential that demonstrates the highest level of knowledge and skill in this complex area of the law.

We don’t just file paperwork. We guide owners through every step, handle tricky creditor issues, and protect your interests so you can move on to the next chapter of your life.

Let’s Talk About Your Options Today

If you’re considering closing your business, don’t wait until creditors force your hand. Talk to us about whether Chapter 7 is the right move, whether you need to protect yourself personally, or whether another option, like a Subchapter V business reorganization, makes better sense.

Contact Larson & Zirzow today. We’ll listen to your goals, look at the big picture, and help you choose the best way forward with your dignity and future intact.