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Can I Continue To Own My Business After Bankruptcy?

For an entrepreneur, one of the most distressing aspects of filing for bankruptcy can be imagining its aftermath — can I continue to own my business after a Chapter 11 filing?

With extensive experience in this area, Jennis Morse Etlinger attorney Mary Joyner says that under certain circumstances, the answer is yes.

Typically, a judge in a Chapter 11 procedure looks at the business, its debts, and the ownership structure when the bankruptcy is filed. If the debts greatly exceed the business’s overall value, shareholders may lose the equity they put into the business prior to bankruptcy.

As the case moves forward after filing — assuming the business is viable and is continuing to operate — there will be a need to recapitalize the company. Depending on the resolution of financial issues with creditors, owners may be able to inject fresh capital into the business and continue in an ownership role.

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